Do banks offer life insurance?
[social_share]Life insurance tends to be offered by life insurance companies, and that is the most common source of life insurance for most people. However life insurance can also be offered through banks.
There are two types of life insurance that can be offered through banks, those that are provided directly by the banks and those that are provided by specialised life insurance companies but are offered through banks. In the latter type of life insurance the bank acts as the sales channel and will also often be the brand that is offered, however it is actually provided by another company, separate from the bank.
There are advantages of taking life insurance from a bank that the policy holder also uses for their transaction account or mortgage. For a start there is sometimes a discount given by the bank due to the lower costs of administration and marketing. There is also the fact that complaints are going to be taken more seriously as there is more business attached to this.
One of the areas where there is likely to be quite a lot of cross selling is where there is a home loan and the lender insists on life insurance with the mortgage. This life insurance policy will cover the bank if the home owner dies. Many banks insist on life insurance as a condition for a loan, particularly if the deposit only covers a small proportion of the loan, in order to protect the lender. This can also be the case with some of the larger personal loans.
Life insurance may also be offered by banks to their consumers through direct mail or through customer contact. As banks have a large amount of information on their client’s earnings and spending habits then they can often produce a good model of who would be most likely to buy financial products, including life insurance.
Some of the larger banks have specialist life insurers employed by the banks. It is important to remember that although the bank may be large then their life insurance division is small compared to more specialist life insurance companies. This will mean that their offers may be less competitive than the more specialist providers.
There are advantages of using specialist life insurers, and to shop around for life insurance. Life insurance is more likely to be cheaper if a specialist provider is used.
