Single Premium Life Fuels Bank Sales

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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.

Allstate Financial, with $66.7 million in premiums, was up 90% from $35.1 million in total bank life premiums in 2000. It is the second-largest life underwriter in banks and the largest seller of single-premium variable life in that channel.

Allstates Shore notes the company only sells single-premium products in banks.

Aegon USA, Cedar Rapids, Iowa, was third in first-year life premiums in banks as its sales soared 173% to $52.4 million last year from $19.2 million in 2000, solely in single-premium universal life products.

“Weve been selling single premium products in banks for 10 years now,” observes William Waldie managing director, product development and industry relations, of Aegon USAs Transamerica Financial Services, Inc. subsidiary. “Weve tried recurring premium, but it doesnt work all that well in banks because you have to ask a lot of questions and do considerable underwriting.”

Single-premium products, on the other hand, are seen by customers and bank reps alike as more of an investment, Waldie notes.

One of the most impressive gains in bank sales last year was by the Equitable Life Assurance Society of the United States, a subsidiary of AXA Financial, Paris.

The company went from sales of only about $1 million in banks in 2000 to $10 million last year and expects to double last years sales this year, says Michael Dibbert, president of Equitable Distributors, Inc.s financial institutions/banking channel.

Dibbert says Equitable targets high-income and high-net-worth individuals and focuses on providing strong wholesaler support to banks.

Equitable has 25 life wholesalers serving banks throughout the country, Dibbert says, which in turn are supported by an internal sales desk in its Charlotte, N.C. offices.

In addition, the company has over 50 certified financial planners to provide additional support, he says.

“Our system works because the broker is always in control,” he adds.

When life insurers were ranked by weighted premiums in bank sales, Nationwide Financial Services Inc., Columbus, Ohio, was on top, increasing sales to $30.3 million from $27.2 million. The Hartford Financial Services Group Inc., Hartford, ranked second, though down slightly to $15.2 million from $15.3 million in 2000, and CUNA Mutual was third, despite a decline to $13.5 million from $23.9 million.


Reproduced from National Underwriter Life & Health/Financial Services Edition, May 27 2002. Copyright 2002 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.