Feb 02, 2024
A comprehensive benefits package that includes life insurance can help employers attract and retain employees, all while giving the employee peace of mind. However, smaller employer groups who want to offer $100K, $150K, or even $250K+ life coverage to their employees will often hit a roadblock.
As a result, most carriers limit smaller employer groups to $20K to $50K coverage on a guaranteed issue basis. Guaranteed issue for life insurance refers to a policy that is offered without the need for the health questions or medical examinations.
However, this carrier limitation should not be the “end of the road” for these smaller employers. Instead, they can offer higher coverage amounts to their employees by stacking life policies. “Stacking life policies” refers to the practice of having multiple life insurance policies to achieve a desired level of coverage.
This approach allows smaller groups looking for increased coverage amounts, who would otherwise not be eligible or approved to write policies with multiple carriers, to acquire the desired coverage on a guaranteed basis.
Plus, in most cases, the group life insurance policies are portable, meaning the employee can retain or convert the coverages at their cost if the employee separates or terminates from the group. It’s best to start the process by adding life coverage with the in-force dental and vision carrier. Most carriers offer a bundling discount on dental and vision premiums when life coverage is added.
Depending on the total premium and discount offered, the first life policy could be “free”. Additional carriers that offer the highest guaranteed issue amounts can then be selected.
Key factors to keep in mind:
- Each carrier being considered for stacking may have different guaranteed issue limits, underwriting requirements, age reduction limits, and policy provisions.
- Managing multiple policies for employees can be complex. Coordinating beneficiaries, keeping track of the policy details, and understanding the plan maintenance requirements of each carrier may be challenging.
- While life insurance benefits are generally tax-free, there could be tax implications if you stack policies, especially if the total death benefit exceeds certain limits.
Amwins Connect represents a full portfolio of carriers and is ready to help you find the right solution. Contact your Amwins Connect Sales Representative to learn more!
