Hoping to make life insurance more attractive for banks to sell, insurance companies are rushing to develop term policies with looser underwriting standards than their whole life counterparts.
Continental Assurance Co. and Transamerica Life Insurance Cos. are already out with term life insurance that doesn't require a medical examination. And Commercial Union Life Insurance Company of America is developing a similar product, which it expects Chase Manhattan Corp. to begin selling next year.
Jackson National Life Insurance Co. last week came out with a product that has a simplified application process. And ITT Hartford Life Insurance Co. is cooking up its own term policies, which it expects to roll out in the first quarter.
By eliminating the need for customers to take blood and urine tests, these companies are trying to make the life insurance sales process faster - and more palatable to banks. Insurance companies view bank programs as a golden opportunity to push term products, which, due to low commissions, have been largely ignored by traditional agency sales forces.
But some bankers and insurance executives say efficiency doesn't necessarily translate into value for the customer.
"The trade-off typically is that the customer pays a higher premium or takes a reduced benefit," said Robert Evans, managing director of insurance services at Fleet Financial Group Inc., Boston.
Mr. Evans acknowledges that he is considering a product offered by Continental Assurance, called Protect 10, which a customer can purchase merely by filling out a form in the back of a brochure.
But he isn't sold yet. Protect 10 offers either a $50,000 benefit or a $100,000 benefit - lower than most traditional term products, which can offer a death benefit of more than $1 million.
"Frankly, we have been having quite a bit of success marketing fully underwritten products," Mr. Evans said.
Indeed, Mr. Evans said traditional agents sell one term policy per week, while agents in his bank program have sold 15 a week since he took over six months ago.
But insurance carriers defend their simplified product. Transamerica's policies are "targeted toward the population that needs smaller to middle- size amounts of life insurance, not the $1 million policy," said Mary McCullough, vice president of financial institutions marketing at Transamerica.
And customers don't mind paying a slightly higher price for convenience, she said. Transamerica has signed on more than 15 bank clients, with another 10 to 15 in contract negotiations, Ms. McCullough said.
Insurance companies also say they are forced to make their products as simple and convenient as possible, because banks are so inexperienced at selling insurance.
"In most cases, the people marketing insurance at banks are not dedicated agents, so ease and simplicity is crucial," said Robert Kerzner, ITT Hartford's, vice president, sales office distribution.
In many bank programs, platform personnel or investment representatives are selling insurance.
Commercial Union has found a way to expedite the medical examination by letting the bank perform it. Instead of a blood test performed by a paramedic in someone's house or at a doctor's office, its product comes with a saliva test kit a bank officer can administer in the branch.
"People don't enjoy getting stuck with a needle to give blood or filling out 500 questions," said Gary Warden, vice president of financial institution marketing.
Most insurance companies aren't going so far as to eliminate medical examinations, but Jackson National Life reduced its insurance application from five legal-size pages with questions on both sides to a two-sided, single-page application shrunk to letter size.
Brad Powell, president of Jackson National's institutional marketing group, insisted the company is not diminishing its underwriting standards to make the application easier. Indeed, he said eliminating medical examination requirements may not necessarily appeal to customers.