Bank staff are advised and supported by the insurance company through wholesale product information, marketing campaigns and sales training.
Bancassurance has proved to be an effective distribution channel in a number of countries in Europe, Latin America, Asia, and Australia.
It is a controversial idea, and many feel it gives banks too great control over the financial industry or creates too much competition with existing insurers.
The concept combines private banking and investment management services with the sophisticated use of life assurance as a financial planning structure to achieve fiscal advantages and security for wealthy investors and their families.
They are designed specifically for bancassurance channels to meet the needs of branch advisers in terms of simplicity and similarity with banking products.
They usually operate as tied agents and sell exclusively the products manufactured by the bank's in-house insurance company or its third-party provider(s).
Financial planners are typically employed by the bank or building society rather than the life company and usually receive a basic salary plus a bonus element based on a combination of factors including sales volumes, persistence, and product mix.
Following the reform of the polarisation regime, banks will have the possibility to become multi-tied distributors offering a range of products from different providers.
These advantages are positively correlated to the degree of integration of the banking and insurance products, although there is no evidence showing the precise extent of the relationship between the two.
The collapse of Fortis in Belgium, and the withdrawal of other players from the bancassurance market, since the crisis, has led to a reduced level of interest in this area.