Nationwide Life Insurance Co. is betting that nontraditional life policies will open the door to the bank broker sales channel.
Rather than push term life insurance through banks, Columbus, Ohio-based Nationwide is hawking single premium variable life policies. They allow customers to choose their underlying investments from a menu of portfolios, making them strikingly similar to mutual funds or annuities.
"They are the most investment-oriented life policies out there," said Joseph D. Sprague, national sales manager for Nationwide Financial Institutions Distributors Agency Inc. "Single premium variable life looks an awful lot like a variable annuity."
Nationwide already has relationships with brokers at 100 banks who sell its variable annuities. Wells Fargo & Co., Wachovia Corp., Bank of Boston Corp., and Fleet Financial Inc., among others, helped Nationwide generate $408 million in variable annuities sales to bank customers in the first half.
A few of its bank clients began selling life insurance this summer, Mr. Sprague said. But he is confident that sales will take off as soon as bankers become familiar with the policies.
"The biggest challenge is the stigma associated (by bank brokers) with life insurance," Mr. Sprague said. "When they get over that in their own mind, they'll see a product customers want."
"This year lots of folks are trying to find the key to selling life insurance in banks," he added.
Michael D. White, managing director of the Financial Institutions Insurance Association, said variable life insurance policies are probably better suited for bank brokerage clients than bank customers.
Banks that want to sell insurance to the mass market should stick to term and whole life insurance policies, he said.
"A lot of people just want their insurance needs taken care of and don't want to turn their insurance program into an investment one," Mr. White said.