Prudential Financial sold a relatively small amount of term life insurance products through Wells Fargo’s retail banking outlets, a senior Prudential executive said Thursday.
The Newark, N.J.-based insurer announced Monday it would suspend sales of its MyTerm life insurance policies through the scandal-tainted Wells Fargo. The bank admitted sales reps had opened thousands of bogus bank accounts without the permission of customers.
“MyTerm sales through Wells Fargo based on annualized new business premiums were approximately $4 million from the beginning of the relationship through the third quarter of 2016,” said Stephen Pelletier, executive vice president, chief operating officer of Prudential’s U.S. businesses, during the company’s outlook 2017 conference call with analysts.
Prudential Financial, the parent company to life, annuity and broker-dealer subsidiaries, earned $28.5 billion in premiums last year on revenues of more than $50 billion. But the company doesn’t gauge the MyTerm imbroglio in financial terms, Pelletier said.
The company began selling MyTerm contracts through Wells Fargo’s branches, kiosks and website in June 2014.
But on Monday, Prudential suspended sales of MyTerm through Wells Fargo pending Prudential’s own investigation.
Prudential, who itself is being sued in one instance by three former employees alleging a cover up and in another instance by a class-action plaintiff, said it wants to make sure Wells Fargo customers were not sold a term policy they didn’t ask for.
“If any of the Wells Fargo My Term customers have concerns about the way the product was purchased, even if it has since lapsed, we will reimburse the full amount of the premium they paid and cancel the policy if it hasn't been cancelled already,” Pelletier said.
Wells Fined for Aggressive Sales
Wells Fargo was fined $185 million earlier this year for opening new bank accounts in the name of customers who had not asked to open new accounts.
Bank employees blamed aggressive and unrealistic sales goals for the reckless behavior and 5,300 employees were fired over the scandal. Former CEO John Stumpf resigned.
Before Wells Fargo’s sales tactics spilled into the public eye, Prudential had surveyed the bank’s customers about letting their MyTerm life policies lapse. The survey responses didn’t indicate fraudulent conduct with regard to life insurance purchases, Prudential said.
Following the revelations about Wells Fargo’s sales practices, Prudential expanded its review into how MyTerm life contracts were sold in branches and on the Wells Fargo website.
Banks offer a ready-made distribution channel for insurance companies looking to boost life insurance sales to middle-market customers, as the insurer doesn’t have to rely on a network of commission-based agents.
MyTerm is one of six term life insurance products offered by Prudential and is one of the simplest individual life insurance policies it sells. Offering only a death benefit, MyTerm requires no medical underwriting and premiums remain level for the life of the policy, Prudential said.
A 35-year-old female nonsmoker in good health can buy a 20-year MyTerm policy with a $100,000 death benefit for about $14 a month, the company said.
Coverage amounts range from $50,000 to $250,000 in increments of $25,000.
InsuranceNewsNet Senior Writer Cyril Tuohy has covered the financial services industry for more than 15 years. Cyril may be reached at [email protected]