Taking banks' fledgling insurance sales efforts to a new level, First Union Corp. and NationsBank Corp. have begun pitching a vast array of low- cost life insurance products via the mail.

In a sharp departure from most banks' direct-mail insurance efforts, the North Carolina giants are offering information and prices on term life insurance policies from as many as 40 carriers. The offerings are being promoted through statement stuffers that instruct customers to call a toll- free number for details.

Until now, most banks have limited their direct-mail insurance campaigns to a single carrier's products designed for a narrow audience.

The programs, though still in the pilot stage, are sure to attract attention. First Union and NationsBank are known as two of the country's most aggressive retail marketers. And banks are grappling for ways to fit insurance into their product lines in the wake of the U.S. Supreme Court's recent ruling that states cannot block insurance sales by banks in small towns.

By hawking term-life policies, NationsBank and First Union say they are targeting a market that historically has been neglected by life insurance agents: Middle America. The cheapest and simplest form of life insurance, term policies do not include an investment component.

Therefore, they are seen as particularly well suited for mail and telephone sales. Term policies have proven costly to distribute through traditional channels, such as agents.

"No one has cracked the code yet on distributing term insurance efficiently and affordably, and still add value to the customer," said David de Gorter, senior vice president, overseeing First Union's insurance group.

"We're trying to serve the mass-middle market," added Christine McLynn, senior program manager at NationsBank Insurance Group. "This is the world the insurance agents aren't going after." Term policies typically appeal to less-affluent customers than more costly permanent and whole life policies do.

For NationsBank, the term insurance pilot marks the $169.6 billion-asset company's first foray into selling life insurance. Initially, it is sending term policy promotions, which offer products from 40 different carriers, to 250,000 customers in Virginia, Maryland, and Washington.

First Union, the $77.3 billion-asset bank, already dabbles in life insurance sales through a small agency that sells life, property and casualty, and automobile insurance. It would not reveal the extent of its pilot program, which includes 20 carriers.

At both banks, callers to a toll-free number reach agents who take a complete profile of the customer. The agents then match the callers with several appropriate products.

Potentially, the two banks' programs have enormous reach, as First Union and NationsBank do business with a combined total of 20 million households. With that kind of distribution, insurers say, banks are sure to emerge as major sellers of life policies, whether they hawk them through the mail, or agents.

"I don't know which strategy will prevail, but I'm certain the banks will be significant distributors of life insurance, enough that no insurance company can ignore them," said Frank Gencarelli, senior vice president, sales and marketing at First Colony Life Insurance Co.

But some experts say banks selling term policies through the mail will need a monumental response from customers to generate substantial revenue.

"Term insurance is for the masses; there isn't a lot of money in it," said Kenneth Kehrer, president, Kenneth Kehrer Associates, Princeton, N.J.

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