Single Premium Life Fuels Bank Sales
Led by a sharp rise in sales of single-premium products, banks sold $452 million in first-year life insurance premiums in 2001, up 31% over 2000, a survey by Kenneth Kehrer Associates, Princeton, N.J., finds.
Kehrer expects even further increases in single-premium products in the first half of this year.
Kehrers survey found that bank sales of recurring premium life actually slipped 18%, from $152 million to $124 million last year. But single-premium sales more than made up for the difference, rising 70% to $328 million in 2001 from $193 million the year before.
Bank sales of recurring-premium life products last year dropped to just over 27% of banks total life sales, compared to about 44% of banks total life insurance sales in 2000.
California Federal Bank, Sacramento, Calif. and Dime Savings Bank, New York City, have had considerable success in selling single-premium products, a fact that has not gone unnoticed by other financial institutions, Kehrer notes.
“CalFed definitely had an impact on single premium sales in other banks,” agrees Rob Shore, senior vice president of Allstate Corp.’s Glenbrook Life and Annuity Company, Northbrook, Ill. “Through our CalFed partnership and their willingness to discuss how theyve succeeded with single premium, weve been a direct beneficiary.”
Although dollar premiums rose substantially in banks in absolute terms, by another measure, they actually declined, Kehrer points out.
Because the life insurance industry discounts single-premium life 90% in estimating life insurance sales, these weighted premiums actually fell roughly 8% from the previous years level, from about $171 million to $157 million.
Figures from LIMRA International, Windsor, Conn., show that total life insurance industry weighted premiums fell last year by 3% to $8.24 billion. Because banks weighted sales fell even further, banks share of total life sales in the U.S. decreased to 1.4%, from 1.5% the year before, Kehrer observes.
In first year premiums, Liberty Life of Boston, part of Liberty Mutual Group, sold the most life insurance through banks for the fifth straight year, increasing to $94.3 million last year from $56.8 million in 2000.
With $91.8 million in universal life, Liberty is a significant factor in the dominance of UL products in bank distribution, Kehrer notes.