Just as banks are looking to get a firmer toehold in the insurance market, so too is the ubiquitous Charles Schwab & Co.
Ten days ago the San Francisco discount brokerage company began to extend nationwide a life insurance pilot program it initiated this year, said William J. Klipp, president and chief operating officer of Charles Schwab Investment Management Inc.
The pilot, which covered California and other western states, began six months ago and focused on three products: 10-year term, universal life, and survivorship life insurance.
Schwab has now expanded both the range of products and their regional coverage, Mr. Klipp said. The expanded program reaches 25 states, and the discount brokerage will add 5-, 15-, and 20-year term life policies to the mix.
Zurich Life Insurance is underwriting the term policies, while the universal and survivorship policies are underwritten by Denver-based Great West Life and Annuity Insurance Co., said Mr. Klipp. Schwab had been in partnership with Great West for the pilot.
The firm expects to take the program nationwide once it has qualified to sell insurance in the remaining states, he said. Schwab will be filing applications during the next two months.
Customers can sign up in a number of ways. They can go to a Schwab branch office, use a special toll-free number, or apply on-line, said Mr. Klipp. "There is, of course, a medical follow-up that occurs," he said.
The firm is trying to "interrupt people that are in the buying process" by offering a superior insurance product, said Mr. Klipp. "What we're not trying to do is become insurance salesmen," he said.
Because Schwab does not have a commission agent, its customers get a break on price, according to Mr. Klipp. "We don't have commissioned sales representatives involved in the process," he said.
Schwab will initially market the insurance products to its "4 million- plus customer base," using direct mail statement stuffers. However, by the end of 1998, it plans to seek out new customers as it develops a reputation in the insurance market, said Mr. Klipp. He added that Schwab expects the policies "to be an excellent customer acquisition product."
