In the United States, where banks are able to sell life insurance in their branches, almost all of the sales they make are for single premium products.
A study conducted by industry research group LIMRA examined how US banks market and sell individual life insurance, the challenges they face, and the best practices of successful institutions. According to the report, institutions that use a profiling process to gather data on their customers’ life insurance needs are the ones that do best when selling individual products. Banks have also had some success by linking life insurance sales results to the overall compensation, bonus, and performance management of their in-house advisors. Setting specific sales targets for bank insurance advisors has worked well, says LIMRA.
As for what kinds of products are being sold, the report revealed that 96% of bank life insurance sales are for single premium products, usually in a situation that involves a transfer of wealth. However, 42% of program managers predict that recurring premium sales will be a significant source of growth for their institutions in the future. Asked about their outlook in other areas, 40% of bankers believe that the middle market represents a growth opportunity.
In terms of distribution, most program managers believe that financial consultants and in-branch representatives will still handle most of their sales. While only 7% of banks in the study currently leverage the internet for sales, 71% of those surveyed think online distribution will play an important role in their institution five years from now. Similar growth is anticipated for other direct to consumer methods such as direct mail and outbound call centers.
“Banks already have a relationship with their customers, so an increased emphasis on life insurance and other financial product sales can make them a one-stop shop,” comments Patrick Leary, corporate vice president of distribution research for LIMRA. “The study recommends an omnichannel approach by banks to meet the needs of different demographics while at the same time targeting those more likely to buy life insurance.”