Ask a banker or consultant to name a profitable bank life insurance program and expect a long pause.

Names do not spring readily to mind, because bank programs have not lived up to expectations-even though several dozen banks have been marketing noncredit life insurance for two to three years.

"Profitability is just something that's elusive at this point," said Robert Baranoff, a vice president at the Life Insurance Marketing Research Association.

It will be another three to five years before banks - which generate about $130 million in yearly life insurance sales, according to one consultant - begin to register consistent profits in this business, experts predict.

Though opinions on the causes differ, many bankers and consultants agree that banks have chosen to generate quick sales by building their insurance business around low-margin term insurance polices-instruments that merely carry a death benefit.

Instead, they argue, banks ought to be selling higher-premium products such as universal and variable whole life. Though harder to sell, because of the added complexity of an investment component, these policies are potentially more profitable, they say.

"I think it's corporate culture that's preventing them from coming to those conclusions," said Elizabeth C. Malone, senior vice president for research with Friedman Billings Ramsey & Co., an Arlington, Va., securities firm. "The reality is some products do have good margins built into them- they are just more difficult to sell."

And turning a profit by selling inexpensive term life insurance is difficult because sales volume has to be huge, said Michael D. White, a consultant based in Radnor, Pa.

"Banks are still buying into the old notion of "buying term and investing the difference," Mr. White said.

Instead, he and others argue, banks ought to be pushing the benefits of whole life, such as tax-deferred buildup of the cash value of the policy.

A major stumbling block for banks in insurance marketing has been their penchant for taking a short-term view, said Robert G. Millen, vice president of annuities for Principal Financial Group, Des Moines. Many banks evaluate programs in a year or less, he said.

He said banks have been too quick to take existing products from insurance companies and plunk them down in branches without building a long-term strategy to woo customers.

Said Douglas French, a principal with Tillinghast-Towers Perrin, New York: "People are gluing old things into the bank, and that's never going to work."

Another obstacle has been the knee-jerk reaction to offer insurance company products without tailoring them for bank customers, Mr. French said.

According to Tillinghast, 66 cents of every $1 spent on life insurance premiums goes to savings and protection. Twenty-seven cents goes to administrative fees including commissions, and 7 cents to underwriters as profit.

Though the underwriter's profit cannot be further shrunk, administrative costs can, Mr. French said.

One bank that many consider a model for long-term profitability is Fidelity Federal Bank, Glendale, Calif. The $4.3 billion-asset subsidiary of Bank Plus Corp. of Los Angeles has modeled its insurance sales after European and Canadian examples, said Robert P. Condon, executive vice president.

The bank began selling life insurance about two years ago and now offers a range of products, he said.

In the first six months of the year the bank sold $1 million in life insurance premiums, Mr. Condon said, and he expects to beat that mark in the second half.

If banks want to succeed in insurance, they have to think in terms of relationships, Mr. Condon said. Fidelity Federal's more than 200 representatives focus on building wealth for customers. Because the representatives can sell any bank product, customers can have one main contact with the bank, he said.

Mr. White said savings can be found in commission fees, which have inched upward as life insurance sales have stagnated. He said that nonbank brokers often sell just one policy per week.

If that broker were to use a bank's marketing depth and make three sales per week, his commission could be halved but he would still realize a 50% increase in compensation, Mr. White reasons.

In general, commissions run between 75% and 125% of the premium value the first year, he said.

Besides reducing costs, tailoring products, and building relationships, Mr. White said, banks must really commit to insurance sales. He mentioned Fleet Financial Group and Wells Fargo & Co. as examples of banks that effectively disbanded their full-service bank insurance groups when profits were slow in coming.

Mr. White said that even though it may take a year or more to get a life insurance program to run in the black, it will take five to see it grow to a significant business. "In all its aspects it is a long-term business and you need to persevere."

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