The Vanguard Group
is planning to do with life insurance what it did with mutual funds. However, the question is whether customers will take to the product which has long been known as an item that is "sold not bought." Life insurance is also not as simple a say as mutual funds since it involves medical testing and a more complicated structure than funds.
Despite the hurdles, the Valley Forge, Pennsylvania-based firm is planning a low-cost, Web-delivered term life insurance product targeted at frugal Vanguard fund shareholders. As with its funds, Vanguard will sell the insurance policies directly to individuals and not through brokers.
Applicants for the insurance will complete an initial application online. Then an enrollment specialist will contact the applicant to complete a medical history over the telephone. This will be followed by a no-cost, para-medical exam, according to the firm. Once all test results are received, the underwriter will issue a decision regarding qualification for insurance. Vanguard executives expect that the majority of applicants will be issued a policy within 30 days.
The new product line (which goes by the name Vanguard Term Insurance Program) is headed by John Heywood
and will be sold through the firm's Web site. It is an extension of its existing variable annuity product, according to firm officials. Vanguard has offered annuities since 1991.
Aegon Group, which underwrites Vanguard annuities, will underwrite the term life policies through two of its insurance subsidiaries -- Peoples Benefit Life Insurance Company and AUSA Life Insurance Company. Policies will be underwritten in New York state through AUSA Life and Peoples Benefit will underwrite policies in the remainder of the country.
"We're looking forward to working again with AEGON, a leader in the insurance industry, to bring our high-value approach to a new line of business," said John J. Brennan
, chairman and ceo, in a statement. "Expansion of our insurance services reflects our continued commitment to offer our clients a broad array of very high-value financial services."
Stay ahead of the news ... Sign up for our email alerts now