Inside or out?

That's a question more banks are wrestling with in sales of individual life insurance.

Lon Smith, president and chief executive officer of Hartford Life, is an outsourcing advocate - which makes sense since he's also a provider.

"Banks don't have to do it all in-house," he said. "You don't have to do much beyond ask the question. You can get whatever help you need from us."

It's obvious why Mr. Smith wants banks to succeed at selling individual life insurance: His company offers a mix of fixed and variable annuities, life insurance coverages, mutual funds, and employee benefits. The Simsbury, Conn., unit of the Hartford Financial Services Group is the top seller of annuities through banks; it sold $2.237 billion of them through banks in the first half, according to the consulting firm Kenneth Kehrer Associates in Princeton, N.J.

"When bankers think about insurance, it's the 'a' word - annuities' - that generates the most excitement," Mr. Smith said. "The sales figures are impressive: Two-thirds of the insurance premiums earned through banks are from annuities."

Michael White, chairman and CEO of Michael White Associates in Radnor, Pa., is among those who say banks could do just as well by hiring their own producers to sell life insurance.

"Find someone with good communications skills, who is a quick learner and get them to sell life insurance," he said. "I wouldn't necessarily farm it out. Insurance companies haven't demonstrated that they have the answers to a quick sale, either. Banks can find someone senior to do this."

Mr. Smith argues that banks are not committed enough to life insurance sales.

"The bank must be willing to work with the carrier," he said. "But the carrier also has to realize that while annuities are easy to take an application for, a life policy is a little more difficult. So we have to simplify the process. If we could put all these factors together, an enormous, underserved market will be served."

Mr. White counters: "If the issue was how simple the product is, why are annuities adding new features all the time? That is not simplifying. It's a matter of salesmanship, not simplification."

Hartford Life has 180 life professionals across the country who can work with a bank at the point of sale and meet with the bank client directly. Many other life insurance companies could offer similar service to banks, Mr. Smith said.

The bank's trust officers, investment reps, and lenders are included in all Hartford Life strategy meetings, Mr. Smith said.

"For smaller banks, our professionals can do it all, from making the call to closing the sale," he said. "For bigger banks, perhaps all that is needed is some assistance." But "at the high end, it's critically important to have a partner with the expertise to write the business. Even if you have your own life people, they're probably going to need some help."

One thing he and Mr. White agree on is that bank distribution ought to be a growth channel for life products.

"This is a sale that banks should be making," Mr. Smith said. "Besides the new revenue, it's also a sale that will help your overall relationship with clients. You're doing more for them, giving them a reason to stay with you."

Mr. White offered: "There is a great opportunity, because a large number of American households don't have life insurance of any kind - and that is astounding. If nearly 40% of Americans don't have it, banks should take advantage of the fact that they can be the point of access for the consumer."

Ken Kehrer, president and CEO of Kenneth Kehrer Associates, says he is skeptical of that claim, and that he has heard it for 10 years. "Essentially, it's still the same message: individual life is the next big thing."

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