What Do Other Bankers Do?

Even though financial institutions have been talking about selling insurance for years, few bankers in the United States are aware that three states have been selling insurance for years-one state since 1907.

Massachusetts, Connecticut and New York have, combined, about $32 billion worth of policies already in existence. That makes the amount of insurance through financial institutions in the three states enough to rank among the top 50 insurance companies in the country.

During the past five years, the three states have increased the amount of insurance a bank can issue to any one individual. The ceiling in 1985 was $62,000 per person. It is now $250,000. As a result, the value of savings bank life insurance in force has doubled during the last three years.

The biggest reason for buying life insurance at a financial institution is cost. In Massachusetts a $250,000 term policy that would cost an individual approximately $300.44 a year from a major insurance company would cost $225 a year from a financial institution, according to the insurance industry analyzer A.M. Best, Oldwick, N.J.

The financial institutions say there is no great profit in selling insurance, but it is a customer service enhancer, and a great cross selling factor. It is another step towards one-stop-shopping.

Copyright © 1991 Bankers' Hotline. Originally appeared in Bankers' Hotline, Vol. 2, No. 6, 7/91