First Allmerica Financial Life Insurance Co. has unveiled a new life insurance policy designed for wealthy bank clients. It offers long-term, tax-sheltered investment that could be helpful in estate planning.

The variable universal life policy covers two people, typically a married couple seeking to pass along their estate to heirs with minimal tax impact. The proceeds are paid out after both die.

Private banks and trust departments are being targeted as prime venues to sell the policy, called Select Inheiritage. Allmerica already has many relationships with banks, which are the source of 15% of its annuity sales.

Allmerica, based in Worcester, Mass., hopes that banks looking for more- progressive insurance products will get sales going for the so-called second-to-die policy, which hands off the investing to such prominent money managers as T. Rowe Price Associates; Standish, Ayer & Wood; and Putnam Investments.

"A lot of people follow the theory of buying term life insurance and investing the rest," said Mark G. Steinberg, managing director of Allmerica Investments Inc. "The Select Inheiritage policy has insurance protection and investments in one program."

The high note of the new policy's pitch is that the investment return is paid out as a benefit that cannot be taxed.

"What they're marketing here is the ability to invest the cash value with various money managers and the investments build up on a tax-free basis," said Kim E. Baptiste, a partner at Schulte, Roth & Zabel, a New York law firm with a large trust and estate practice.

Select Inheiritage most likely would succeed at banks that already have established insurance sales programs.

"It would require someone who has experience in life insurance to explain what a second-to-die policy is," said Valerie Jordan, a bank insurance consultant in Belchertown, Mass.

"Chances are, this would fit into an upscale private bank or trust department" because the policy is designed for the affluent, she said.

Although the policy uses nonbank money managers, it likely will appeal to bankers because insurance sales help diversify the sources of revenue, Ms. Jordan said.

"A bank is going to be getting a commission, so they don't need to be greedy about asset management fees, too," she said.

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