Banks sold a record $1.8 billion in life insurance premium in 2010, a 40 percent increase from the previous record of $1.3 billion set in 2004, according to a recent report from Kehrer-LIMRA .

However, bank life insurance sales did fall in the fourth quarter by 21 percent making it the first quarter-to-quarter decrease in seven quarters. Banks sold $406 million of life premium in the fourth quarter compared to $512 million in the third quarter.

The fourth quarter decline is partially due to the fact that Allstate recently exited the bank market in order to increase focus on its P&C business, according to a statement. Transamerica also dropped its flagship single premium universal life product from the bank channel.

"Over the past several years carriers have done a good job supporting the bank rep’s transactional culture with simplified products and processes, especially single-premium wealth transfer products," said Scott Stathis, managing director, Kehrer-LIMRA. "The hope is that this strategy serves as a ‘gateway drug’ which gets bank reps comfortable selling other types of life insurance as well."

Bank life sales were boosted in 2010 overall because of the low interest rate environment which has caused the spread between fixed annuities and certificates-of-deposit to narrow, according to the report. The resulting decreased customer interest in fixed annuities and has prompted reps to focus more on promoting life insurance.

Universal life products represented 46 percent of bank life insurance sales and whole life represented 52 percent of the premium mix. The remaining balance was split between term and variable universal life.