Though their enthusiasm for mutual funds may be leveling off, bank customers are showing an increasing receptivity to life insurance, according to American Banker's annual consumer survey.

Of 504 people in the 1996 American Banker/Gallup survey who said they primarily used commercial banks, 16% said they would be interested in buying life insurance if their banks offered it. This was up from 15% in 1995 and 13% in 1994.

Twenty-four percent expressed interest in mutual funds from their principal banks - the same percentage as in 1995 but down from 29% in 1994.

Of all 1,031 respondents, 20% of those who hold at least one account at any type of financial service institution said they had actually purchased life insurance from a bank, up from 11% in 1994.

Twenty percent also said they had bought mutual funds from a bank in 1996, up from 18% in 1995 and 16% in 1994.

Many banks have only recently gotten life insurance programs off the ground. Many continue to battle state regulators just to get permission to sell the products.

However, mutual funds have been on banks' product menus for years.

One explanation for the contrast in trends may be that customers have fewer places to acquire insurance.

From discount brokerage companies to no-load shops, customers have been deluged with advertising and promotions telling where they can buy mutual funds. But life insurance has traditionally been peddled by agents door to door; only recently have other financial intermediaries entered the fray.

Bankers said the American Banker survey results (another report on investment product findings appeared Monday) indicate their marketing of insurance is paying off.

"We find people are responding to advertising that targets specific needs," said Jeffrey Green, vice president in charge of life sales at American Savings Bank, Irvine, Calif.

American Savings puts posters over safe deposit boxes, promoting the use of life insurance in a common trust. The thrift also has signs in branches selling life insurance as a way to finance a college education.

Banks are also marketing life insurance through customer account statements, on automated teller machines, and through statement stuffers in the mail. On designated "insurance days," American Savings platform representatives focus on cross-selling insurance to customers who walk into branches.

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