Liberty Life Insurance Co. has expanded its cross-selling of mortgage products with an aggressive marketing approach.
LibertyDirect, a unit of the Greenville, S.C., company, has been formed to market mortgage life insurance products with optional term and accidental death features to customers of more than 1,000 financial institutions.
Fleet Mortgage Group, GMAC Mortgage, NationsBank, and First Union National Bank are among mortgage providers that now offer this coverage to their customers.
The insurance premiums are covered by the mortgage servicer for the first six months of a loan, and after that the customer is given the option to continue the coverage.
Premiums are typically included in escrow as part of the mortgage payment and remitted by the bank to Liberty. Any mortgage holder is eligible for Liberty's program.
"These individuals have qualified for a mortgage, so they qualify for us. We do exclude anybody that already has this kind of coverage, though," said Ronald F Loewen, president of Liberty Life Insurance Co. "It is not uncommon for us to take the entire file of a mortgage servicer, and we don't necessarily target a specific type of customer."
If a mortgage holder dies in an accident, Liberty assumes the loan balance, and the borrower's beneficiaries get title to the house. The charge for the insurance varies from about $10 to $40 a month.
If borrowers choose to stop paying the insurance premiums or miss payments, neither their credit status nor their mortgage would be affected.
Liberty collected $96 million in premiums from all policyholders in 1996, $123 million in 1997, and an estimated $140 million in 1998.
"This business has been a stepchild to Liberty Life," said Jerry Shaleuly, senior vice president of Financial Services Marketing, a unit of LibertyDirect that handles mortgages. "Aggressive marketing with larger and more sophisticated financial institutions" is the key to the company's growth, he said.
LibertyDirect buys portfolio lists from banks and directs its marketing to people on the list through telemarketing and direct mail.
LibertyDirect is testing an accelerated mortgage life insurance product, whereby a policyholder diagnosed with a terminal illness can gain access to up to half the policy's cash proceeds.
There are stipulations in this type of policy. "You can't have cancer and know it and sign up for this policy," Mr. Shaleuly said. "But that is the nature of the insurance business."
The company expects this feature to be available in the second or third quarter.