Bank Life Sales Trending Upward Once Again
Life insurance sales have trended lower in 2011 when compared with 2010, but quarter-to-quarter growth in 2011 has been consistently positive, according to the Kehrer-LIMRA Life Report. Most of the top writers, and about half of the manufacturers overall, grew their sales during the third quarter, as well as for the first nine months of the year (Figure 1).
In the third quarter of 2010, banks sold $513 million in life insurance premium, more than they had in any other quarter on record.
However, a year ago a few companies enacted changes which torpedoed bank life sales in subsequent quarters. This includes Allstate who dropped out of the market and Transamerica who took their leading product off the shelf. The third quarter tally of $363 million was 30 percent below the record set the prior year. In the general life insurance market, first-year recurring premium represents nearly half of the dollars sold, as was the case in banks a decade ago. Because flexible premium products are less of a fit in the transactional bank environment, 95 percent of the premium sold in banks today is paid in one lump-sum. A simplified issue single premium product works well in banks as buyers can complete their application in approximately ten minutes, pay for their policy, and walk out with life insurance coverage.
Nearly 20 percent of the recurring premium sold through banks in the third quarter of 2011 was for term coverage. Term is much more affordable option since it has no cash value and only insures the buyer for a specified period.
Universal Life and Whole Life products represent just about half of the new life insurance premium brought in banks and savings institutions, despite the fact that UL sales are down 38 percent compared with the first nine months of 2010, due in part to the withdrawal of two major underwriters as well as product design changes across the industry.
While most manufactures that sell through banks still offer term, premium sales were once again down, dropping 15 percent for the third quarter and 17 percent year-to-date. However, according to LIMRA’s U.S. Individual Life Insurance Sales Study, the product is significantly more affordable than its permanent counterparts and hence represents about 60 percent of the coverage purchased and 35 percent of policies sold through banks.
“Bank life sales are once again trending in the right direction, and an analysis of the life products being sold indicate bank-based reps are starting to get the hang of the wealth transfer life insurance sale. What would really be impressive is if carriers help banks figure out a way to nail the permanent protection-oriented life insurance sale” said Scott Stathis, managing director of Kehrer-LIMRA. “So far the track record is not impressive.”
Kehrer-LIMRA is a provider of best-practices research, benchmarking, study groups and consulting to the bank brokerage industry. Additional information can be found atwww.kehrerlimra.com.
Contact:
Scott Stathis, Managing Director
scott.stathis@kehrerlimra.com
978.448.0198
300 Day Hill Road
Windsor, CT 06095
source form: insurancenewsnet
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