Bank Insurance: Increasing Your Benefits, Decreasing Your Costs

Getting insurance from from your bank can offer the benefit of convenience and, sometimes, savings. When making a decision to purchase insurance, be sure to understand how bank insurance might fit into your personal financial picture.

Getting Insurance From Your Bank

More than half of banks in the United States offer insurance products. This surprises many people as insurance has typically been something you associate with buying from an agent or a company.

Until the 1990s, it was not legal for banks to sell insurance. Prior to that time there had been a “wall” erected by Congress that prohibited commercial banks from entering the insurance business.

After taking down that wall, it became up to each individual state to authorize banks to sell insurance.

What Type of Insurance?

Banks can and do sell life insurance, disability insurance, annuities, and property and casualty insurance. Fewer banks sell property and casualty insurance, such as home owners insurance, than the other insurance products.

Far more banks with extensive multi-state operations offer insurance than do local or regional banks. However, it’s as simple as calling your local bank or checking the bank’s website to determine whether your bank offers insurance and if so, what type.

Competition and Convenience

The obvious benefit to you of insurance offered through your bank is the increased competition in the marketplace and the convenience of having your insurance needs met where you bank.

If you maintain most of your financial relationships at one banking institution, when you apply for insurance, your financial data is close at hand. Often, the bank can speed the application process for you because it is easier to retrieve data that you might have forgotten.

Added Benefits

In every area of your financial life, including bank insurance, relationships are key. If your insurance agent knows you well, he or she can offer service faster and more effectively. The same holds true for banking relationships. When you are known at your bank, the full array of services often can be offered to you with less hassle.

As both a financial services and bank insurance customer, your bank has added incentive to provide quality service, to know you personally and to remain competitive so as to keep your business.

When it’s time to shop for insurance, keep your bank in mind for relationship-building purposes.

Things to Consider

It’s worth pointing out the bank insurance is not and never will be the first focus of a bank. Experts say that about 5 percent of revenue for the largest U.S. banks come from their consumer insurance operations.

To be sure, banks bring an economy of scale and the possible advantage of a long-term relationship with you. But insurance agents tend to focus on insurance. You should weigh carefully who offers you the best product at the best price and can back it up with personal, fast, effective service.

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Bank Insurance: Increasing Your Benefits, Decreasing Your Costs

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