Bank Sales Of Life Insurance Gained Momentum In First Half
The evidence is mounting that banks are making progress in building their life insurance sales.
According to the Kehrer Report semi-annual survey, banks increased their life sales to $77 million during the first half of 2001, a 45% increase over the same period last year. Actual new life premium was up 76% to $218 million, but almost three-fourths was in single-premium products.
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Life insurance industry sales statistics discount single-premium products to 10% of the actual cash premiums in toting up life sales. Thus the bank weighted-premium total of $77 million was only 35% of the $218 million in premium from new life sales that banks actually produced between January and June.
Banks had $157 million in single-premium life sales, almost twice the level achieved during the first six months of 2000. The lions share was placed in single-premium universal life contracts (62%), with 20% in single-premium whole life contracts and only 14% invested in single-premium variable life.
Banks have been more successful in building single-premium life business than traditional recurring-premium life business, because single-premium products share some of the characteristics of annuities and are an asset-transfer sale.
In contrast, recurring life products are more like a savings product, requiring the purchaser to reduce consumption of other goods and services over time to make the recurring premium payments.
Bank sales of recurring premium life products increased 36% to $61 million during the first half of the year.
Variable products account for most recurring-premium sales. Variable life and variable universal life captured 74% of first-half recurring-premium life sales by banks. Term life products attracted 16% of first-year premiums, with 5% going to universal life and 5% to whole life.
Meanwhile, other life insurance distribution channels were actually experiencing shrinking sales. LIMRA International reports total life insurance industry sales (or weighted premium) were $4.2 billion in the first half, down 3% from the same period last year. The decline occurred in the second quarter, after first quarter sales were essentially flat with the first quarter a year ago.