Preneed Shortfalls

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Most funeral directors would be hard pressed to calculate what investment return their preneed trust is producing.  Regular deposit and distribution activity makes computation of investment returns difficult.  The more frequent the activity, the harder it is to compute the return.  Accordingly, it would be easier for the funeral director to look at paid in…

For consumers who need installments to pay for their preneed arrangement, funeral directors report that the $100 monthly payment is the comfort threshold for most individuals.   For a widow planning her own funeral, the $100 monthly payment will require an installment term of six years or longer.  If the widow needs to also cover an…

In a prior post, we used Allan Sloan’s article on the Treasury bond market to discuss the impact on preneed insurers and their funeral home clients.  The Treasury market has forced preneed insurers to lower their policy returns, which has a direct impact on the profitability of funeral homes.  To make insurance funding more profitable…

In our last post, we used Allan Sloan’s article on the Treasury bond market to highlight the investment exposures to death care trusts.  Today we will look at how the Treasury market is also impacting funeral homes that rely upon insurance for preneed funding.  Mr. Sloan’s article alluded to insurance companies being required by statute…

A preneed client recently complained about preneed shortfalls they were experiencing on trust funded contracts.  We went back to our 2014 blog post (The Factors Contributing to Preneed Shortfalls: Investment Return and Operator’s Performance Costs) and began an analysis of those factors.  Since the ‘culprit’ is usually poor investment returns, we started with…

At its June meeting, the Missouri State Board of Embalmers and Funeral Directors gave instructions to their staff to draft legislation that would provide the Board powers to force preneed sellers to contribute funds to their trusts to cover ‘shortages’.   The instruction was not without some controversy as one Board member questioned why he was…

In prior posts, we discussed the impact that investment return and performance cost increases have on preneed shortfalls.  In this post we will look at how installment payment options impact the funeral and cemetery operator.

Many funeral homes do not offer installment payment options because those monthly payments cut directly into the trust earnings that…