Wal-Mart tests life insurance sales
The big-box chain has partnered with MetLife to sell life insurance in 2 states.
This post comes from Mark Chalon Smith at partner site Insurance.com.
The New York-based insurer now offers a prepaid life insurance policy in about 200 Wal-Mart stores in Georgia and South Carolina. Packaging and promotional materials for the one-year policies, which start at $69 for $10,000 in death benefits, feature the puckish image of Snoopy, the "Peanuts" canine created by Charles Schulz.
The big-box chain store, headquartered in Bentonville, Ark., and recognized as the world's biggest retailer, follows in the steps of Costco, which began offering health insurance in nine states in April. Costco hooked up with Aetna in its insurance deal.
Walmart's clout attracted the insurer
Shane Winn, a MetLife spokesperson, said the joint venture with Wal-Mart will provide the largest U.S. life insurer with access to the retailer's broad consumer base.
"With 84% of Americans having shopped there in the past year, Wal-Mart provides the type of reach and scale that MetLife seeks, so we can bring this product to the widest possible audience," Winn said.
Winn described the partnership as "a pilot program" with no immediate plans to offer policies beyond South Carolina and Georgia. But if sales are good in those states, he noted, it would make good business sense for MetLife to consider marketing to other regions.
The policies vary according to age and how much coverage you want. People aged 60 to 65 pay $429 a year for $25,000 worth of coverage, while those 18 to 44 can get a one-year, $10,000 policy for $69.
How does the process work? Wal-Mart shoppers buy cards equal to the policy's cost. From there, they'd call MetLife, which would ask questions about their health and, if they're approved, activate the policy. Those who don't qualify can get a refund at Wal-Mart, Winn said.
Cutting out the middleman
MetLife has made it clear since its earnings report in May that it wants to cut expenses by $600 million by 2016. One of the ways to do that is to focus more on direct sales -- like selling insurance on the Web or at Wal-Mart. Direct sales of life insurance could climb to 13% of the nationwide life insurance market in 2016, up from the 8% in 2010, according to a company presentation.
But Winn stressed that the Wal-Mart partnership is not about cost cutting; it's more about finding an untapped revenue stream in a new market.
Sarah Spencer, a Wal-Mart spokesperson, told Bloomberg that this is the first time the retailer has sold insurance. She added that Wal-Mart is trying to expand its financial services offerings, and that it's too early to judge customers' response to MetLife's products.
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Shopping at Costco saves money, even after paying the $55 membership fee, but comes at the price of buying in bulk and limited selection.