Magazine article American Banker

Insurance: Credit Life, Accidental Death Products under Fire

Magazine article American Banker

Insurance: Credit Life, Accidental Death Products under Fire

Article excerpt

By MICHAEL O'D. MOORE As banks assume a higher profile in the insurance business, they are beginning to come under fire from consumer advocates and the media for marketing particular policies.

Of particular concern are two narrowly focused insurance products-credit life insurance, a mainstay of banks, and accidental death and dismemberment, a newer product for most.

Critics contend these policies are of dubious value.

A recent story in The Washington Post, titled "Insurance Pitches Worth Being Tossed into the Junk Pile," took banks to task for offering these products.

James Hunt, a consultant for the Consumer Federation of America who was quoted in the article, saved his harshest criticism for accidental death and dismemberment policies, which banks often offer through the mail.

"That's what we would call junk insurance, and that should be avoided by virtually everyone-unless you like to jump out of planes or scuba dive," Mr. Hunt, a former banker, said later in an interview with American Banker. In recent years, banks have been striving to make a name as sellers of life insurance and property and casualty policies. Many industry observers say banks are in a position to take share away from insurance agents.

But Mr. Hunt and others warn that banks could undermine their legitimacy by pushing questionable products.

Gerri Detweiler, author of "The Ultimate Credit Handbook," said credit life insurance, which insures that a loan will be repaid in the event of a borrow's death, can often sour a relationship with a bank customer. …

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