Switching from Homesteaders to Another Pre-Need Insurance Carrier: A Complete Guide

Understanding the Decision to Switch from Homesteaders Life Company

Homesteaders Life Company has been a cornerstone of the pre-need funeral insurance industry since 1906. Based in Des Moines, Iowa, they work with thousands of funeral homes nationwide and offer extensive training programs and marketing support. Despite their market position and long operating history, some funeral homes find themselves considering a switch to another carrier.

The decision to change pre-need insurance carriers is significant and shouldn't be taken lightly. It affects not just your business operations, but also the families you serve and the relationships you've built over years. Understanding why funeral homes make this change—and what alternatives exist—can help you make an informed decision about whether switching is right for your situation.

Common Reasons Funeral Homes Consider Leaving Homesteaders

Scale vs. Personal Service Concerns

Homesteaders' size and national reach bring certain advantages, including financial stability and comprehensive support systems. However, some funeral directors describe the relationship as becoming increasingly transactional rather than personal. The company's scale can sometimes mean less individualized attention for smaller funeral homes or those with unique needs.

Funeral homes in smaller communities often value personal relationships and direct access to decision-makers. When dealing with a large national carrier, some directors find it challenging to get the personalized service they prefer for their business and the families they serve.

Commission Structure and Compensation

While specific commission details vary by contract, some funeral homes find that Homesteaders' compensation structure doesn't align with their business model or growth goals. Funeral directors sometimes seek carriers that offer more competitive arrangements or different commission structures that better support their pre-need sales efforts.

Product Flexibility and Innovation

Large carriers like Homesteaders have established systems and processes that provide consistency but may limit flexibility. Some funeral homes want more adaptable products or innovative approaches to pre-need planning that smaller, more agile carriers can provide.

Geographic and Cultural Fit

Funeral service is deeply personal and often reflects local customs and preferences. Some funeral homes find that regional carriers better understand their specific market conditions, cultural considerations, and business practices than national companies.

Understanding Pre-Need Insurance Before Making a Switch

Before evaluating alternatives to Homesteaders, it's essential to understand exactly what you're switching from and to. Pre-need insurance is distinctly different from regular final expense insurance or life insurance.

Pre-need insurance creates a contract between the policyholder, the funeral home, and the insurance carrier. The funeral home is named as the beneficiary, and the insurance proceeds can only be used for funeral services at that specific location. This arrangement locks in funeral services at today's prices, protecting families from inflation and providing guaranteed funding for their chosen arrangements.

The insurance carrier holds the premium payments and invests them, with the goal of covering the full cost of services when needed, regardless of when that might be. This differs significantly from final expense insurance, which pays cash to any beneficiary for any purpose.

Alternative Carriers to Consider

Regional Carriers with Personal Touch

For funeral homes in Kansas, Oklahoma, Arkansas, and Texas, Directors Life Assurance Company represents a compelling alternative to large national carriers. Founded in 1987 by independent funeral directors and headquartered in Oklahoma City, Directors Life was created specifically to address the needs that funeral directors felt weren't being met by larger carriers.

Directors Life's funeral-director roots mean they understand the business from the inside. Their approach emphasizes personal relationships and direct communication with funeral home partners. Because they only operate in four states, they can provide more individualized attention and faster response times than national carriers managing relationships across the entire country.

The company offers both pre-need life insurance and annuity products, working directly with funeral homes and pre-arrangement advisors. Their regional focus allows them to understand local market conditions and cultural considerations that might not be apparent to national carriers.

However, Directors Life is only available in their four-state region, which limits this option to funeral homes in Kansas, Oklahoma, Arkansas, and Texas.

Other National Carriers

Several other national carriers serve the pre-need market, each with different strengths and approaches:

National Guardian Life (NGL), based in Madison, Wisconsin, offers pre-need and final expense products through independent agents. They work with funeral homes but maintain a different relationship model than some carriers.

Wellabe (formerly part of CUNA Mutual) provides preneed funeral insurance plans and works with funeral homes for pre-arrangement. Their approach focuses on simplified products and processes.

Various other carriers serve specific regions or market segments, each bringing different advantages in terms of products, service, and relationship models.

Marketing and Lead Generation Companies

Some funeral homes work with companies like Precoa, which focuses on pre-need marketing and lead generation rather than just insurance underwriting. These companies partner with funeral homes to develop comprehensive marketing programs and lead generation systems.

This approach can be particularly valuable for funeral homes looking to grow their pre-need business significantly or those wanting more sophisticated marketing support than traditional carriers provide.

Factors to Evaluate When Switching Carriers

Financial Stability and Ratings

While Homesteaders brings the financial stability of a century-plus operating history, any alternative carrier should demonstrate solid financial strength. Look for carriers with strong ratings from agencies like A.M. Best, which evaluates insurance companies' financial stability and claims-paying ability.

Regional carriers may have different rating profiles than national companies, but this doesn't necessarily indicate inferior financial strength. Focus on the carrier's reserve levels, investment practices, and regulatory compliance record.

Product Portfolio and Flexibility

Evaluate whether potential carriers offer the specific products your families need. Some carriers specialize in certain types of pre-need arrangements or serve specific market segments better than others.

Consider factors like:

• Available coverage amounts
• Age ranges accepted
• Medical underwriting requirements
• Payment options and terms
• Portability if families move
• Inflation protection features

Service and Support Model

Different carriers provide different levels of support for funeral homes. Consider what type of relationship you want:

• Direct access to decision-makers vs. dedicated account representatives
• Local vs. remote support teams
• Training and educational programs
• Marketing support and materials
• Claims processing speed and efficiency
• Technology platforms and integration capabilities

Commission and Compensation Structure

While compensation shouldn't be the only consideration, it's important to understand how different carriers structure their arrangements. Some offer higher upfront commissions, while others provide better long-term residual income. Consider how different structures align with your business goals and cash flow needs.

Transition Support

Switching carriers involves significant administrative work. Evaluate potential carriers based on:

• Assistance with existing policy transitions
• Training for your staff on new products and procedures
• Marketing material development
• Technology integration and setup
• Timeline flexibility for the transition

The Switching Process: What to Expect

Initial Evaluation Phase

Begin by thoroughly documenting your current situation with Homesteaders. Analyze your existing book of business, commission structure, support satisfaction, and specific concerns that are driving the consideration of a switch.

Reach out to potential alternative carriers for exploratory discussions. Most reputable carriers will provide detailed information about their products, services, and support without requiring immediate commitments.

Due Diligence and Comparison

Create a structured comparison of carriers based on the factors most important to your business. This might include financial strength, product features, commission structures, support models, and geographic coverage.

Request references from other funeral homes that have made similar transitions. Speaking with funeral directors who have experience with potential carriers can provide insights that formal presentations might not reveal.

Contract Review and Negotiation

Carefully review any new carrier agreements with legal counsel familiar with insurance and funeral service law. Pay particular attention to:

• Exclusivity requirements
• Territory restrictions
• Commission terms and payment schedules
• Support obligations from the carrier
• Termination clauses and conditions
• Existing policy transition procedures

Implementation and Transition

Plan for a transition period where both old and new relationships may operate simultaneously. This ensures continuity of service for existing policyholders while establishing new procedures.

Develop staff training plans for new products and procedures. Ensure your team understands any differences in how the new carrier handles claims, customer service, or administrative requirements.

Considerations for Existing Policyholders

Policy Continuation and Protection

One of the most important considerations when switching carriers is how existing policies will be handled. In most cases, existing Homesteaders policies will continue in force under their original terms, even if you switch to a different carrier for new business.

This means you may have ongoing relationships with multiple carriers—Homesteaders for existing policies and your new carrier for future sales. Ensure you understand the administrative requirements this creates.

Communication with Families

Existing policyholders should be informed about any changes that affect them, even if their existing policies remain unchanged. Clear communication helps maintain trust and prevents confusion about their coverage.

For new families, explain why you've chosen to work with a different carrier and how this benefits them. Focus on improvements in service, products, or value rather than criticizing your previous carrier.

Record Keeping and Administration

Maintain detailed records of when the transition occurred and which carrier underwrites each policy. This becomes important for claims processing and customer service in the future.

Establish clear procedures for handling inquiries about policies from both carriers. Your staff should know which carrier to contact for specific policies and families.

Making the Decision: Is Switching Right for You?

Switching from an established carrier like Homesteaders to an alternative isn't a decision to make lightly. The disruption to your business operations and the learning curve for new products and procedures represent real costs.

However, for funeral homes that feel their current carrier relationship isn't meeting their needs or supporting their goals, switching can provide renewed energy and better alignment with their business model.

Consider whether the issues you're experiencing with Homesteaders might be resolved through direct communication or adjustments to your current relationship. Sometimes, concerns can be addressed without the complexity of switching carriers.

If you decide to move forward with evaluating alternatives, approach the process systematically. Document your requirements, evaluate options thoroughly, and ensure any new relationship offers clear improvements over your current situation.

Regional vs. National: The Core Decision

For many funeral homes, the choice ultimately comes down to whether they prefer the resources and stability of a large national carrier like Homesteaders, or the personal attention and specialized focus of a regional alternative.

National carriers offer extensive resources, broad geographic coverage, and the financial stability that comes with scale. They can invest in technology, training programs, and support systems that smaller carriers might not be able to match.

Regional carriers, particularly those with roots in funeral service like Directors Life, offer closer relationships and deeper understanding of local markets. They can often provide more flexible products and faster decision-making because of their smaller scale.

Neither approach is inherently superior—the right choice depends on your specific needs, market conditions, and business philosophy.

Working with Multiple Carriers

Some funeral homes choose to work with multiple pre-need carriers rather than switching entirely. This approach can provide:

• Product diversity to meet different family needs
• Reduced dependence on any single carrier
• Competitive options for different market segments
• Risk mitigation if one carrier experiences problems

However, working with multiple carriers also increases administrative complexity and may complicate staff training and family education.

Technology and Integration Considerations

Modern funeral homes increasingly rely on technology for customer relationship management, policy administration, and business operations. When considering a switch from Homesteaders, evaluate how well potential carriers integrate with your existing systems.

Some carriers offer sophisticated online platforms for policy management, claims processing, and customer communication. Others may require more manual processes or different software systems.

Consider the total cost of switching, including any technology changes, staff retraining, and administrative adjustments required.

Conclusion: Making an Informed Decision

Switching from Homesteaders Life Company to another pre-need insurance carrier is a significant business decision that requires careful consideration of multiple factors. While Homesteaders offers the stability and resources of a large, established national carrier, some funeral homes find that regional alternatives better serve their specific needs and business philosophy.

For funeral homes in Kansas, Oklahoma, Arkansas, and Texas, Directors Life Assurance Company offers a compelling alternative with its funeral-director roots and regional focus. For funeral homes in other areas, various national and regional carriers provide different combinations of products, services, and support.

The key is to thoroughly evaluate your current situation, clearly define your requirements, and systematically assess how different carriers meet those needs. Whether you ultimately decide to switch or stay with Homesteaders, the evaluation process itself can help clarify your priorities and improve your pre-need program.

Remember that the goal isn't necessarily to find the "perfect" carrier—it's to find the carrier that best aligns with your business model, serves your families effectively, and supports your long-term goals in the pre-need market.