The burial insurance industry hit $142.89 billion in 2022. With an aging population and increased death rates, the demand for these services continues to grow. This creates an opportunity for entrepreneurial-minded individuals looking to tap into this expanding market by starting their burial insurance agency.
Getting started in the burial insurance, or the final expense insurance, space does require some upfront investments. Secure necessary licensing, develop relationships with insurance carriers, and market your services. However, the potential rewards can make it a worthwhile endeavor. Burial insurance policy sales agents can earn attractive commissions and build a sustainable business for the long term.
This guide will walk you through how to start a burial insurance company. The topics covered include market research, registering the EIN, obtaining business insurance, formulating an accounting business plan, optimizing marketing, and more.
1. Conduct Burial Insurance Market Research
Market research is essential to creating a solid burial insurance business plan. It provides important details about your target market, local market saturation, how much burial insurance should cost, trends in products and services, and more.
Some information you might learn through funeral insurance and death benefit research includes:
- The target market for life insurance policy and burial insurance is seniors 50 and over, specifically those concerned about leaving funeral costs for loved ones after they pass away.
- Selling these affordable policies to seniors provides opportunities for attractive commissions while fulfilling an essential need for many families.
- Top burial insurance sellers can earn six-figure incomes.
- With so many aging consumers to reach, the market can support more agencies specializing in final expense coverage.
- Most policies pay out between $5,000-$15,000.
- Some carriers offer benefits up to $40,000. This provides families funds to cover everything from caskets and gravesites to flowers and obituaries.
- Approximately 35%-40% of seniors 65 and over do not have life insurance coverage.
- Many also have limited savings or dependency on Social Security income alone. So preneed policies fill an important gap.
- You must build trust and rapport with clients when selling final expense coverage.
- Relationship-focused agents who specialize in simplifying this topic for seniors are best positioned to capture significant market share moving forward.
The aging population and rising death rates mean demand will continue expanding for life insurance policies and burial life insurance in the years ahead. More families will need burial insurance to pay for end-of-life costs. This creates a long runway for growth.
2. Analyze the Competition
When launching a new burial insurance provider agency, researching the competitive landscape in your local area is crucial. This applies to brick-and-mortar establishments and assessing whole life insurance competitors online.
Start by identifying major funeral homes, insurance agencies, or financial services firms selling preneed coverage in your region. Search online directories and listings to compile a list, then research each company. Visit their website and social media pages. This shows what types of burial insurance they offer, how they market services, and any specializations like seniors or military.
For local physical locations, use search tools like YellowPages and Google Maps. See where competitors are physically situated about your prospective agency. Search for consumer comments on these platforms along with review sites like Yelp. This reveals customer satisfaction levels and product sentiment.
When examining digital presence, plug competitor names into platforms like Alexa and SimilarWeb to assess web traffic, engagement levels, site visitor profiles, and referral sources driving consumers to them. Use Buzzsumo to analyze their content strategy success. See which posts draw the most interest from your audience and competition.
Check Google Analytics to understand keyword opportunities by examining terms people are currently using to find your competitors online. This shows gaps where you can outrank incumbent players. Ongoing monitoring also lets you evaluate if competitive counter-measures are needed once up and running.
3. Costs to Start a Burial Insurance Business
When starting a burial insurance agency, plan for both initial investments to get up and running as well as recurring overhead to maintain operations. Carefully projecting costs and setting budgets in key areas will help guide decision-making.
- Licensing & Legal Formation – $2,000 to $4,000 You will need to pass state insurance exams and pay licensing fees which average $500. Also, factor in professional service fees if establishing a corporate business structure. Expect $1,000+ for legal filings and accounting setup.
- Rent & Utilities – $2,500/mo+ While some agents operate virtually, having a professional office space to meet clients is ideal. Lease payments for a modest commercial office suite will typically run $1,500 – $3,000 per month depending on location. Add another $1,000 monthly for utilities and services.
- Insurance – $1,200 per year A business owner’s policy providing commercial liability protection averages $100 per month. Errors and omissions E&O insurance, important for financial service providers, generally runs $500 – $1,000 annually.
- Equipment & Supplies – $3,000 to $5,000 At minimum, you will need a computer, printer/scanner, filing cabinets, office furniture, and supplies which can easily total a few thousand dollars. Some of this could be rented vs purchased initially.
- Marketing & Advertising – $2,000+ Website development, printed promotional materials, and paid online/offline ad campaigns require significant upfront marketing dollars to launch your agency. The Conservative budget is around $2,000+ to start.
- Working Capital Reserves – $10,000 Finally, ensure you have adequate working capital to cover fixed overhead costs for at least 6 months as you build a book of business. This provides a buffer while customer acquisition ramps up.
- Lease/Mortgage Payments – $18,000 to $36,000 yearly Rent on leased office spaces continues as a major cost component. If purchasing commercial property, financing, and taxes are added costs.
- Staffing Expenses – $30,000+ yearly Initially you may operate solo, but adding just 1-2 staff like a sales producer or policy admin averages $15/hour at 40 hours weekly. This can quickly escalate payroll costs so budget accordingly.
- Insurer Contracts – $500 to $1,500 annually Maintaining access to highly rated insurance carriers’ policy offerings, usually requires annual contract payments per company.
- Advertising Spend – $3,000+ yearly Consistently running paid ads across platforms like Facebook, Google and YouTube is key for customer acquisition. Budget around $250+ monthly for advertising.
- Technology & Software Costs – $2,400+ yearly From a premium CRM system to tools for marketing automation and data analytics, powering operations digitally has added costs. Budget around $200 monthly.
- Accounting & Legal Fees – $500+ yearly Ongoing accounting for financial reporting and tax preparations will run a few hundred dollars monthly. Also, factor in periodic legal fees for contract reviews, etc.
As with any small business, adequately planning for both upfront and recurring costs across these pivotal areas will better position your agency for profitability. Be sure to include buffers for surprise expenses as well. Managing cash flow and costs effectively lets you focus on customer development.
4. Form a Legal Business Entity
When starting a burial insurance agency, the legal business structure you choose impacts everything from personal liability to taxes. Weighing options for sole proprietorship, partnership, LLC, or corporation is important to align with your goals. For most agencies, forming an LLC provides the best protection with the flexibility to grow.
A sole proprietorship is the easiest and cheapest option to establish as it has minimal legal filings. You simply start conducting business activities under your name and SSN. However, this exposes your assets to any potential business lawsuits or debts. For property and liability risks involved with insurance sales, limiting personal exposure is advised.
A general or limited partnership involves two or more co-owners operating under a shared business name. Partnerships allow the pooling of more startup capital and the splitting of managerial duties. However liability risk still directly impacts all partners. Disagreements between partners can also disrupt operations. Setting roles and exit strategies contractually when formed is critical.
Limited Liability Company (LLC)
Establishing a burial insurance agency as an LLC combines pass-through taxation benefits with liability protections for personal assets. Unlike sole proprietors, your home, bank accounts, and investments are shielded from agency debts or lawsuits. Compared to S-corps, LLCs involve less paperwork and maintenance efforts too while allowing more flexible distribution of profits to members.
C-corps and S-corps let you sell stocks and divide ownership more complexly, unlike LLCs. However, these entities come with more legal compliance duties around shareholders and board structures. S-corps do limit liability risks like LLCs. But for smaller agencies just starting, properly structured LLCs provide the best protections without unnecessary corporate complexities.
5. Register Your Business For Taxes
An Employer Identification Number, or EIN, serves as a unique tax ID number for your business to identify it to federal and state tax authorities. This IRS-issued number is essential to open business bank accounts, apply for licensing, hire employees, and more. EINs are free and easy to obtain for LLCs and corporations by filing online.
As a formal business structure like an LLC or corporation, your burial insurance agency needs its own EIN – you cannot use your social security number or personal tax ID. Applying online takes just minutes and you get the EIN immediately upon submitting the IRS Form SS-4.
Here is the straightforward process to get your burial insurance EIN:
First, gather information needed for the application like complete legal business name, address, ownership details, and NAICS industry classification code.
Next, visit the IRS EIN Assistant site and answer a short eligibility questionnaire.
You will then complete and submit the online SS-4 form with your basic business details and responsible party information. Double-check accuracy to avoid future issues.
Finally, your burial insurance EIN will be provided upon form submission. Print/save the confirmation notice for your records along with the SS-4 PDF.
The entire online EIN process is free of charge and typically takes under 10 minutes from start to finish. You can immediately use it to open business bank accounts or apply for any required state tax licenses.
An important related step is to register with your state tax authority for any sales or use tax obligations. Failing to collect or remit applicable taxes leads to penalties. Research if any tax licenses or bonds are needed for insurance agencies in your location when establishing your entity. These vary by state but often have nominal fees.
6. Setup Your Accounting
Managing finances is one of the most crucial parts of running any successful business. For burial insurance agencies, implementing an organized accounting process from day one prevents issues with taxes, reporting, audits, and cash flow management down the road.
Open a Business Bank Account
Start by separating all business income and expenses from your finances. Open a dedicated business bank account and apply for a business credit card. Comingling funds causes major complications come tax time. Also, make all vendors aware you are operating as a formal business during transactions.
Next, establish digital accounting systems to automatically track all transactions from your accounts in one dashboard. User-friendly software like QuickBooks connects to your business bank/credit cards and imports all expense and income data in real time. This makes managing cash flow, reconciling statements, invoicing clients, and reporting finances much simpler.
Hire an Accountant
Worked with an accountant from the beginning too. They offer essential bookkeeping services monthly/quarterly to ensure accuracy. This frees you to focus on insurance sales while they handle payroll, taxes, financial statements, and adjusting entries as needed. Expect fees of around $200 monthly.
When annual tax time comes, your accountant also prepares and files all returns for your agency. They guarantee full legal compliance which is invaluable if ever audited by tax authorities. Expect to invest around $500+ yearly for tax prep and filing.
7. Obtain Licenses and Permits
Before conducting any insurance sales or transactions, your burial insurance agency must comply with all required state licensing regulations. Find federal license information through the U.S. Small Business Administration. The SBA also offers a local search tool for state and city requirements.
To distribute burial insurance policies from life insurance carriers, individual agents must hold resident or non-resident agent licenses in your state. These are issued by state departments of insurance after passing rigorous exams on categories like life/health insurance concepts and state laws.
Licenses must be renewed every 2 years with set continuing education requirements to maintain competence. Fees range from $50 to $300+ initially with lower renewal costs. This licensing allows soliciting, selling, or negotiating burial insurance products.
Beyond individual agent licensing, most states also require a separate business entity insurance license for the agency itself to transact insurance. This credential confirms your LLC or corporation is registered to operate legally as an insurance distributor. It is renewed annually.
Apply through the National Insurance Producer Registry which handles licensing on behalf of state regulators. You must name a licensed agent designated as the responsible party for your agency’s license. Fees are often around $100+ initially.
Some states mandate insurance agencies carry surety bonds to cover any policyholder losses due to fraud or negligence. These function as insurance for your business if caught mishandling client premium funds for example. Research if a $15,000+ bond is needed to meet your state’s insurance laws.
Ensure you comply with any county or municipal permits related to running a local business establishment if leasing office space. Common examples include fire safety, health department, zoning permits, and local business licenses tied to occupancy codes for public buildings.
8. Get Business Insurance
Even with an LLC or corporation shielding your assets, lacking adequate business insurance leaves your agency vulnerable financially. Just a single uncovered claim could lead to thousands in damages or lawsuits absent proper policies.
For example, something as simple as a slip/fall injury on your premises opens liability risks. Without protection, you cover medical bills personally. Likewise, basic hazards like fire, theft, or vandalism could destroy office equipment and files leading to costly replacements without coverage.
Cyber risks also increase annually, making data breach insurance vital when handling sensitive customer information. Just one breach exposing names, birth dates, and SSNs opens major legal liabilities if uninsured.
Safeguarding your agency starts with bundled Business Owner’s Policies (BOPs) covering fundamental risks like property damage, loss of income, and commercial liability starting around $30 per month. Rates depend on your revenue and asset levels.
It is also wise to discuss specialized coverages like E&O, cyber, and employee dishonesty with commercial insurance brokers familiar with your niche. They access larger carrier appetites catering to insurance agencies. Independent agents quote policies from multiple providers at once while advising on optimal coverage limits and deductibles.
The process involves supplying details on your operations, locations, business value, and risk exposures so agents can accurately quote. Applying online takes about 10 minutes. Coverage can start in a few days once bound. Expect total premiums of around $150 monthly for burial insurance agencies.
9. Create an Office Space
Establishing a professional office space lends credibility when meeting with clients about such an important and emotional topic as final expenses. While home offices minimize costs, having a dedicated external location offers privacy and room for storing sensitive documents securely. It also keeps work and personal life separated.
Joining an open coworking campus like WeWork offers modern private offices from $300-$800 monthly backed by reception staff, conference rooms, office equipment, and administrative support. This flexibility suits earlier-stage agencies still establishing operations. However, privacy could be limited when handling confidential client data frequently. Lockable private suites are available for additional cost.
If local zoning codes allow, opening a small standalone storefront broadcasting services to passing shoppers offers high visibility. But long-term leases around $3,000+ monthly and needed renovations make a retail space costlier. Also, confirm foot traffic demographics align with your target burial insurance clientele before committing.
For established agencies seeking a permanent corporate presence, leasing dedicated office suites in commercial buildings provides the most credibility. Expect lease rates comparable to retail spaces but typically with tenant improvement allowances provided. This equips the space as your needs evolve long-term in one location.
10. Source Your Equipment
Launching a burial insurance agency does not require extensive specialized equipment. But put thought into outfitting your office technology, furniture, and supplies cost-effectively. Here are tips for acquiring essentials based on budget and goals.
For the latest equipment under warranty like a desktop computer, laptop, multi-function printer, and document scanner, big box chains link Staples and Office Depot offer one-stop-shopping convenience. While paying full retail prices, you get new condition items, tech support, and flexible return policies. Expect at least $3,000 for a basic hardware bundle.
Gently used equipment cuts costs substantially. Check local inventory on Facebook Marketplace and Craigslist for office furniture like desks and file cabinets costing 50%+ less than new. Also, browse Goodwill and consignment shops for budget finds. Purchasing refurbished machines from top makers like HP and Dell offers corporate-grade technology warrantied to function like new for often 40% savings.
If cash is limited initially or to test options before major purchases, renting basic office equipment gets you started quickly. National chains like Rent-A-Center offer flexible leasing terms with no credit checks required. You can upgrade items over time as needs evolve. Basic printer/scanner/copier combos run around $60 for a 3-month rental.
Multi-year business equipment leases allow bundling complete office setups from technology to phones, furniture, and supplies for low monthly payments rather than huge upfront costs. These are backed by warranties and tech support too. Lease terms like 36 or 48 months balance affordability with ownership before needing upgrades.
11. Establish Your Brand Assets
Creating professional brand recognition is pivotal for credibility in the insurance space. This starts by securing branded assets that cohesively establish your agency’s identity and install trust during sensitive conversations.
Get a Business Phone Number
Allocate a dedicated business phone line using a Voice over IP (VoIP) provider like RingCentral. Cloud-based systems enable seamlessly forwarding calls to any device while projecting the continuity customers expect when contacting your agency. Expect around $30 monthly for a toll-free vanity number and intelligent call routing features.
Creating a Logo and Brand Assets
Design a sleek, memorable logo that reflects your niche like an owl denoting wisdom for seniors. Looka’s AI logo maker provides countless refineable options using your company name and preferred imagery. Spend time choosing a meaningful, unique concept.
Creating Business Cards and Signage
Well-designed Vistaprint business cards lend cred in quick introductions so order 500+ to start. Include essential details – name, title, phone, email, and web address matching your domain.
Likewise, quality exterior office signage, continuous website display, and strategic brochure placement in related businesses remind passersby of your services.
Purchasing a Domain Name
Secure a domain like YourInsurance [dot] com from registrars like Namecheap. Choose short, descriptive names without odd spellings or hyphens. Make sure accurate contact info is displayed to build trust.
Building a Website
An informative website transforms prospects into clients by answering key questions 24/7. User-friendly website builders like Wix make launching sites simple or hire web developers on Fiverr for custom designs. Focus copy on easing concerns seniors have to guide them to helpful policy information.
12. Join Associations and Groups
Tapping into collectives of like-minded professionals provides invaluable insights as a newcomer to the preneed insurance space. Local associations, meetups, and online forums enable accessing proven best practices while building your professional network.
In most states, assigned risk pools and guaranty funds sustain general stability across burial insurers. Groups like the California Life and Health Insurance Guarantee Association or Florida Life and Health Insurance Guaranty Association protect policyholders if smaller carriers fail. Joining these trade associations connects you to key industry resources plus advocacy strengthening the niche.
Attending regional industry trade events helps put faces to names while learning trends. Sites like Meetup index frequent gatherings like the DFW Insurance Professionals with seminars and guest speakers. Conferences also feature keynote talks from innovators shaping the future of insurance.
For continuous idea sharing from anywhere, groups like Insurance Brokers and US Insurance Leads, Networking, & Referrals on Facebook provide 24/7 access to thousands of global peers. Post questions, learn effective sales tactics, and stay updated on changing regulations through engaged online discussions.
13. How to Market a Burial Insurance Business
While you may offer excellent bespoke coverage options, investing in promotional strategies is required to sustainably expand your client base. Leveraging both digital and traditional channels through multipronged campaigns maximizes reach to seniors in your area.
As you build initial clientele, positive word-of-mouth referrals from satisfied customers serve as your most credible and conversion-friendly advertisement. Staying closely engaged with policyholders to address ongoing needs and changes cultivates this.
Run occasional referral promotions awarding policy credits or gift cards to existing customers who recommend friends. This incentivizes proactive sharing of your agency’s services.
- Launch Google Ads campaigns focused on priority keywords related to burial insurance and final expense planning. Geo-target ads to only show for searches by users in surrounding areas for most relevancy.
- Promote content and offers through Facebook/Instagram by creating lookalike audiences that match the demographics of existing purchasers.
- Start a YouTube channel creating quick videos answering common questions buyers have about policy options, payouts, exclusions, etc. Optimize with keywords.
- Guest post articles on local senior living blogs read by your ideal prospects. Secure backlinks help with SEO.
- Send dedicated email nurture campaigns guiding near-ready prospects across key info to convert.
- Print brochures and flyers to display at high-traffic locations like libraries, community centers, and places of worship frequented by seniors.
- Take out ads in church bulletins and newsletters from senior groups and centers. Include limited-time discounts for readers.
- Sponsor tables at charity galas and golf outings aligned with your brand values. Be present to meet event attendees.
- Mail direct mailers with personal notes to households in zip codes with high indexes of older residents.
- Run ads on cable TV channels like Hallmark and consider niche radio spots during programming when mature audiences peak.
Casting your brand, offers, and expertise across diverse forms of outreach ensures total saturation locally. Then employing thoughtful relationship nurturing and loyalty boosters translates more folks reached into policyholders over time. Market intentionally and consistently.
14. Focus on the Customer
Providing compassionate, thoughtful client support builds credibility and referrals quickly in this delicate business. How you make policyholders feel during difficult conversations or claims processes directly impact your reputation and retention.
Take extra time explaining options in plain language that cuts through industry jargon older buyers get overwhelmed by. Find policies addressing their exact needs and budget, not just what pays you the highest commissions.
Follow up post-purchase with personal check-ins as health situations evolve, not just automated renewal notices. Find moments to add value like sharing guidance around end-of-life planning resources.
When a death does occur, move mountains behind the scenes to expedite claims for suffering families needing funds to cover final expenses. Walk beneficiaries gently through the required paperwork and answer questions about payout timelines transparently.
Even just small gestures like sending flowers or catered meals to grieving customers strengthen bonds immensely during traumatic times.