If you google the term “life insurance stacking” you will find multiple articles promoting this practice to consumers as a way to save money. While this may be a viable strategy for laddering policy expiration dates to meet evolving lifetime insurance needs, the practice also serves to avoid the level of underwriting scrutiny that would come with a larger policy. Could one of your applicants be intentionally avoiding an insurance exam or other medical requirements?
In preparation for the rollout of our new Total Line Service, MIB has completed an analysis of data captured from the MIB Data Vault which contains in force and terminated policy data as well as pending insurance activity. It has shed some interesting light on our member’s potential exposure to risks like stacking and churning.
Revealing potential adverse behavior
Below is a case study using REAL data from one of our members. The Total Line Alert revealed two policies put in force on a 25-year-old applicant in 2020. Just over two years later, he applied to four different companies for amounts that vary between $250K and $1M. This raises several questions:
• Can this applicant justify the need for $4,200,000 of coverage?
• Were the in force policies admitted on the application?
• Is he replacing the 2020 coverage already?
Could this be stacking or churning? This is a scenario that may require further investigation!
Below is a copy of the full Total Line Alert for this case study:
This is a real MIB member – could this data be from your company? What does your company have in place to predict stacking or churning risk?
Armed with this information from the MIB Total Line Service℠, your underwriters can verify that all in force policies were disclosed on the application submitted. They can also proactively identify patterns and behaviors that may warrant further investigation, such as signs of potential stacking, and pivot to traditional underwriting or seek additional requirements prior to approving the coverage.
The MIB Total Line Service
The Total Line Service provides alerts, delivered during the underwriting process, that reflect the total amount of in force and pending life insurance coverage for an applicant. In addition, the alerts include a variety of policy information, including any terminated coverage.
Learn more about how you can empower your underwriters with total coverage exposure data with the MIB Total Line Service by visiting: https://www.mibgroup.com/solutions/total-line-service/