Single Premium Life A Huge Hit, Bank Execs Say

Although the process of signing up customers for SP life was once cumbersome, banks techniques for marketing the product have been “ripening,” as Vacca puts it.

“A 15-minute enrollment process wasnt part of the initial product but now has become a mainstay,” he says. “You have the customer fill out a questionnaire, run a MIB [a check on the customers health history by the Medical Information Bureau, Westwood, Mass.], then issue the policy. So the customer walks out the door with the policy, or its mailed in a couple of days.”

On the other side of the country, the insurance unit of Dime Bancorp, New York, has also been selling single premium life for five years. It still sells more recurring premium than single premium but is one of the leaders in SP products, notes Mittel.

A big reason for sales growth is that the product has significant tax advantages over annuities, Mittel adds.

“Weve been growing at 25% to 30% each year,” he says.

With around 400 licensed people in 123 bank branches, just about anyone the customer talks to at the Dime is able to sell SP life, Mittel notes.

“We often have at least two or three licensed reps in a branch,” Mittel explains. “We either recruit reps who already have licenses, or we take our existing reps and get them licensed. Its just the culture at Dime.”

Usually, a sale requires a couple of visits by the customer to the local bank branch, he explains.

Typically, the target customer has assets he wants to protect or a CD up for renewal. The attractive feature of SP life is that it is like an annuity and hence easy for both the customer and the bank rep to understand.

Vacca agrees, calling SP life “a natural next step” for banks after annuities.

Solid training has much to do with his banks success with SP life, he maintains

“If you want to make it work, you have to present the idea that insurance is not an alternative to investments,” he counsels. “You try to understand what the customer needs. Then if the goal is to leave money to heirs, then the first thing they should do is get insurance.”

He advises banks to train reps about life insurance at the same time as they train for annuities.

“It goes back to the fact that you have the same sales track and the same customers with the same concerns for either kind of product,” he argues. “Yet you may have customers buying annuities who really should be buying life insurance.

“It just depends on the customers situation for what you recommend. If the customer wants safety of principal, then both products provide it, along with liquidity. If the customer anticipates using the money personally, then you want to sell an annuity. But if he wants to pass the money on, then you want to talk to him about single premium life insurance.”

CalFed uses a variety of media to market SP life, including statement stuffers, lobby posters, and “call nights,” where branch staff phone customers and ask them to consider the product. It also offers seminars for its reps in the branches.

SP life does not take away from investment sales, Vacca adds.

“Its a great product,” he concludes. “Its funny to me that at one time, the attitude both externally and internally toward single premium was it would never work. But it has and for all the right reasons. It makes sense for the customer, the bank and the insurer.”

Reproduced from National Underwriter Life & Health/Financial Services Edition, July 22, 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.