Life insurance premium levels at banks show 3Q spike

New life insurance premium levels at banks leapt nearly 60% during the third quarter, beating the overall industry’s growth for the second consecutive quarter, according to data from Kehrer-LIMRA, a subsidiary of LIMRA International Inc.

Total sales of individual life insurance across the country were flat during the third quarter, compared with where they were a year earlier. During the first nine months of 2009, sales of individual life insurance actually fell 11% from a year earlier, a Kehrer-LIMRA report showed.

By contrast, life insurance sales in the bank channel grew by 32% for the first nine months of 2009, along with the sudden 59% spike in sales during the third quarter.

Kehrer-LIMRA pointed out that banks receive lump-sum single-premium payments for life insurance products, which may explain the spike in sales. The market volatility that hurt variable insurance products had less of a negative effect on life insurance with single premiums.

Overall, variable-life-insurance products have taken a beating since the economic downturn; declining markets hurt the growth of cash values in those policies. LIMRA data showed that variable life insurance had a 64% decline in premiums during the third quarter from a year earlier.

Bank representatives may be turning more to life insurance as the investment environment has become hostile for fixed and variable annuities — the bread-and-butter sales for those reps.

“Interest rates on fixed annuities are low, and variable annuities have become more expensive, while the benefits have been watered down,” Scott Stathis, managing director at Kehrer-LIMRA, said in a statement. “Consequently, bank reps have become more receptive to adding life insurance to their sales mix.”

E-mail Darla Mercado at [email protected].

Related Topics: Bank Products