The banking sector has achieved a deeper penetration especially within the rural areas, where the insurance companies do not have branches. With increased integration of financial services and banks seeking to expand the range of services offered to clients, a perfect opportunity exists for the two sectors to enter into a bancassurance partnership. Bancassurance has been a successful model in the European countries contributing 35 percent of premium income in the European life insurance market. It contributes over 65 percent of the life insurance premium income in Spain, 60 percent in France, 50 percent in Belgium and Italy. In India, the signs of initial success is already there despite the fact that it is completely a new phenomenon. Bancassurance in India has good hope for both sectors-Banking and Insurance, but with lot of challenges.