Magazine article American Banker

Outlook Bright for Bank Life Sales

Magazine article American Banker

Outlook Bright for Bank Life Sales

Article excerpt

Byline: Howard Stock

Banks may be on pace for a record year in sales of life insurance, according to Kehrer-Limra's latest Bank Life Report.

Second-quarter premiums of $4.6 billion came largely from the huge growth in popularity of single-premium products, said the report, which was released last week.

While it has enjoyed a recent jump in sales, single-premium life has always outsold other types of life insurance in banks, Scott Stathis, managing director and chief operating officer of Kehrer-Limra, said by e-mail. It looks and smells more like an annuity and the sale is transactional in nature. While it should be sold from a wealth-transfer standpoint, it is sometimes sold as a substitute for a fixed annuity.

Why? Depending on the structure of the product, a policyholder can borrow against the death benefit in order to create an income stream, but Ken Kehrer, Kehrer-Limra's research director, points out that single-premium life's real advantage is that its death benefit can be twice that of a fixed annuity for a male policyholder in his 50s. In fact, many people who bought fixed annuities for the death benefit with some access to the underlying assets in an emergency could have been better off buying single premium.

"Many people invested in fixed annuities with a view to leaving money to their kids or grandkids while recognizing they might have to tap into those savings for an emergency," he saidin an e-mail. "Single-premium life fits that objective better. …

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