Insurance: New Transamerica Life Policy to Pay Monthly

Transamerica Corp. has designed a simplified life insurance product to appeal to the bank market.

The company's Occidental Life subsidiary is offering a policy that pays death benefits monthly for many years, instead of in a lump sum.

By packaging the policies to cover housing expenses or to make a monthly payment equal to lost income, Transamerica is hoping to attract customers unaccustomed to buying insurance.

"People don't relate to a lump-sum benefit - especially in the lower- to middle-income segment" the insurer is trying to reach, said Marilyn McCullough, vice president of financial institutions marketing for Transamerica. "They don't know how much they need."

Already a leader in selling simplified life insurance through the workplace, the San Francisco insurer is now providing term-life insurance policies to banks that they can sell by mail, phone, or in person.

It expects its newest policies - which tie a periodic payment to expenses, such as a mortgage - to be compelling for banks to sell.

"We designed something easy to relate to and understand," Ms. McCullough said.

The policies do not require a medical exam, blood test, or lengthy questionnaire. That should make them unintimidating for underinsured, down- market households - those with less than $75,000 of annual income, Ms. McCullough said.

But innovative products alone don't guarantee a sale.

"They still have to get the bankers trained and motivated," said Kurt Laning, an insurance consultant in Columbus, Ohio, "and figure out how to fit it into their schedules."

"Life insurance is more marketing-oriented than product-oriented," he added.

Transamerica's first bank customer, Indiana Federal Bank for Saving, Valparaiso, is finding that out.

As a first phase, the $820 million-asset thrift has two sales representatives telemarketing the home payment-protection policy to new mortgage customers, said Timothy M. Scannell, managing director for financial services.

Sales have been slow during the first two months of the program, he conceded, despite "tremendous" sales and training support from Transamerica.

"Our salespeople are still more comfortable with the traditional life product," Mr. Scannell said. "It's a different way to sell, and it's a different type of benefit."

He said he expects sales to pick up as the program is expanded to the thrift's almost 6,000 existing mortgage holders and as bankers grow more accustomed to the new products.

By the fourth quarter, Mr. Scannell said, he will mail a statement stuffer to supplement telemarketing in spurring sales among its 32,000 customers overall. Additional training and experience should also begin to yield more sales, he said.

Transamerica anticipated start-up difficulties in the target market - banks with less than $1 billion of assets.

Ms. McCullough said company research showed that bankers from such institutions wanted frequent in-house training and local support.

So Transamerica is relying on a national network of more than 400 representatives backed up by two bank specialists to lend localized support to the national program, she said.

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