U.S. Bancorp is offering term life insurance over the Internet through Great West Life and Annuity Insurance Co.
The Minneapolis-based banking company said Wednesday that customers can get instant approval at www.usbank.com for the Great West policy. U.S. Bancorp is one of the few banking companies that offers term life on-line. Huntington Bankshares of Columbus, Ohio, has a similar arrangement with Great West, a $25 billion-asset company based in Englewood, Colo.
"We set out to provide a policy at a good value that would be simple and convenient to apply for," said Pat Bauer, manager of U.S. Bancorp's digital group.
The Web site offers 10-year term policies with coverage of up to $150,000. To apply, customers fill out a short medical questionnaire; quotes are available without buying the insurance, the banking company said.
The move is part of an initiative to boost the $77 billion-asset company's Internet offerings. U.S. Bancorp seeks to generate a larger proportion of revenue from payment systems and wealth management than from traditional retail and wholesale banking products and services.
"This fits in with the wealth management business they are trying to build up," said Ben Crabtree, an analyst at George K. Baum & Co. in Minneapolis. "The bulk of financial services customers need help in planning their financial package; part of that need is life insurance."
Mr. Crabtree applauded U.S. Bancorp for entering a life insurance partnership rather than buying into the industry.
"The insurance industry is worse than the banking industry - it's not very profitable and is very capital consumptive," he said. "I would downgrade any bank that I followed that bought an insurance agency, but it is still an important product for banks to offer in terms of cross-selling."
Compared with more traditional channels, Internet sales of life insurance still make up a small proportion of all sales. In 1998, Web-based sales of life insurance generated $200 million of premiums, or 0.2% of the total, according to research by Conning & Co. in Hartford, Conn. However, the insurance asset management firm also found that roughly 10% of middle-income Americans expect to buy life insurance on-line by 2003.
Plans for the U.S. Bancorp Web site include offering whole-life insurance, which generally includes a savings element and premiums that do not rise during the life of the policy, the banking company said.