Life insurance from a bank? Gens X and Y say why not

By Maryalene LaPonsie on August 13th, 2012

Younger consumers are more likely than older people to purchase life insurance from a bank, according to a recent report issued by LIMRA, an industry organization.

The report, "Bank on It! Opportunities With Today's Bank Customer," found that half of Generation X members and slightly more of Generation Y would buy their life insurance from a bank.

Meanwhile, only a third of consumers from the older Boomer and Silent generations say they would purchase from a bank. Overall, 44 percent of all consumers would go to the bank for life insurance.

"The younger generations are open to receiving a broad spectrum of products and services from their bank," Patrick Leary, assistant vice president of LIMRA distribution research, said in a press statement. "In addition, many of these younger consumers have no existing relationship with a life insurance agent or financial adviser, so buying life insurance from their bank is not just another convenience -- it provides an opportunity to get the financial protection these consumers really need."

However, banks may be hampered by the fact that nearly half of consumers aren't aware they may sell life insurance products. LIMRA says only 54 percent of consumers across all generations knew they could purchase life insurance from a bank.

Simple products get the nod

For those consumers who are willing to purchase from a bank, most are interested in basic coverage. Seventy percent of survey respondents willing to buy coverage through a bank want simple products, such as term life or fixed-premium whole life policies.

Even affluent consumers, who can afford premiums for more expensive and complex variable life insurance policies, balk at the possibility of purchasing life products through a non-traditional avenue. Only one-third of these consumers say they would purchase their coverage through a bank.

LIMRA notes the report findings indicate potential for banks to improve their share of the life insurance market. With 30 million Generation X and Y consumers saying they need life insurance coverage, banks may be able to cash in on an untapped segment of consumers.

Maryalene LaPonsie
Maryalene LaPonsie has been writing professionally for more than a decade on topics including education, insurance and personal finance. She holds a Bachelor's Degree in Political Science from Western Michigan University.

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