The board of directors of Travelers Insurance Corp. approved Thursday the merger plan with Primerica to create the nation's largest financial services company. Primerica's board had agreed to the plan Wednesday.

Primerica agreed to swap $4.2 billion of its stock to acquire the remaining 73 percent of The Travelers Corp. that it does not already own.The merger, which still requires approval from the shareholders of both companies and insurance regulators in New York and Connecticut, calls for Primerica to exchange .80423 shares of Primerica common stock for each of the remaining shares of Travelers stock.

The proposed new company will be called The Travelers to take advantage of its name recognition among consumers, officials of both companies said.

Sanford I. Weill, Primerica's chairman and chief executive, will assume the same positions with the new financial services giant. Edward H. Budd, chairman and CEO of Travelers, will become chairman of The Travelers' insurance operations.

Primerica obtained a 27 percent stake in The Travelers last year through a $723 million investment that helped the insurer recover from losses caused by Hurricane Andrew and other severe storms as well as sagging real estate holdings.

A few months ago Primerica acquired the Shearson Lehman investment brokerage house and folded into its existing investment division to create Smith Barney Shearson, the second-largest investment brokerage in the country.

The insurance company will maintain its headquarters in Hartford while the parent company will operate out of New York where Primerica is based.

Travelers employees said they were told not to expect details on a proposed merger with Primerica until early next week, although they were reassured that Travelers would stay in Hartford. Travelers employed 32,000 people at the end of 1992, including 11,500 at its headquarters in Hartford and at offices in East Hartford, Glastonbury and Farmington, Conn.

Employees interviewed during a lunch break said supervisors told them the company would remain in Hartford, where it was founded in 1864.

"No one knows how to react to it. We don't know how the merger will affect us, but I think it's good for the company," said another employee who asked not to be identified.

The proposed merger had some employees nervous about the security of their jobs and their benefits.

"In my own personal experience, in situations like this people are usually let go. That's always in the back of my mind," said Keith Bradley, who has worked in the financial services department for three years. "I think it will be good for the company, but as far as employees go, I don't know, that is yet to be seen."

Said another employee who asked not to be identified: "People are psyched about it. The stock prices are going up. By if you're an employee who has been here for a long time, you're really concerned about losing your pension and benefits."

Others said they believed the proposed merger would benefit employees as well as the company.

"We could see raises. We haven't been having a lot of raises because of the past financial disasters," said Ken, a property and casualty underwriter who would only give his first name.

"We're always the first to say we took a loss so we gained the reputation that we're a bad company. We're not, it's the economy that's hurting everybody," he said.