Banks increased life insurance sales by 19% in the second quarter, according to Limra, the largest growth by any insurance-selling channel.
That growth, while striking, pales in comparison to banks’ growth in life insurance in the first quarter, which were up 67%. Unfortunately, Limra doesn’t release dollar amounts with these data.
Limra puts banks’ success in selling life insurance this year down to low interest rates’ cooling effect on other products bank customers might otherwise buy, such as CDs and annuities.
“For certain customers life insurance could be seen as a better alternative to low rate fixed annuities since life insurance has the potential to meet similar investment needs,” says Scott Stathis, managing director and chief operating officer of Kehrer-Limra, the parent group’s bank brokerage specialist. “Also it seems that reps are finally getting comfortable explaining the wealth transfer benefits of life insurance.”
In addition, life insurance companies have worked hard to make their products more transactional in nature, and their application process much simpler, Stathis says. “This caters to the culture in the bank channel and makes it more likely that a bank rep will consider selling life insurance when the other products they typically sell become more difficult to sell.”
“Stockbrokers,” Limra’s statistical bucket for independent financial advisors and wirehouse reps, grew their life insurance sales by 2%.
Over on the insurance side, independent agents and affliates both grew sales in all types of life insurance except for term, which fell by 12% and 5%, respectively. Universal life makes up the bulk of independent insurance agent sales at 59%, while affiliates, or agents who are employees of an insurance company, mostly sell whole life, which makes up 45% of their books.
Overall, whole life premiums were up 23% in the second quarter, their fourth consecutive quarter of growth, bringing whole life’s share of the market up to 31%. Universal life premiums were up 11% and made up 30% of the market as of the second quarter.
Both insurance types gained market share from term life, whose premiums fell 11% in the second quarter, but in some ways term life is a victim of its own success, says Karen Terry, manager of product research at Limra. “Term did really well last year,” and couldn’t maintain such a breakneck pace indefinitely. However, “whole life has continued to perform really well, which indicates interest from consumers in a product offering permanent security with a savings component.”