Manulife has been promoting a unique combination plan called Synergy. It combines coverage on life insurance, disability insurance, and critical illness insurance all under one coverage. If you’re not covered under under a group work insurance policy, this may be a suitable product for you. Buying your coverage bundled like this is likely a less expensive option than purchasing it separately, however be aware that there are some limitations within the policy.
The basic premise behind the policy is that all claims come from a pooled or common insured amount. Basically each claim reduces the amount insured amount, until the insured amount goes to 0. Critical illness has a maximum of 25% of the insured amount, and disability pays a monthly benefit of 0.5% of your insured amount.
Let’s say you purchase $250,000 of coverage. If you should die, your beneficiaries will receive $250,000. However, if you become disabled, your benefits will be 0.5% of the $250,000, or $1250 per month. Each $1250 payment reduces the available pooled coverage. So if you were disabled for 10 months, Manulife would have paid out $12,500 (10 monthly payments of $1250). So now your coverage amount drops to $237,500, which would be the payout should you now die. Disability payments under this structure will last only for about 16 1/2 years, which may not be long enough for anyone younger than their late 40’s.
The coverage also stops at age 65, and there are some limitations on conversion, so be careful you’re up to speed on what happens if you become uninsurable.
It’s an interesting premise, and one that does have some inherent cost savings. Because the coverage amount is limited to $500,000, and that amount may not be enough for your life insurance, you may consider adding a term life insurance rider to the policy, thus increasing your total life insurance coverage.
In summary, if you don’t have inexpensive coverage at work, this can be a cost effective way to get all three types of insurance coverage – life, disability, and critical illness. Just make sure that you’ve addressed whether the disability insurance payments are going to last long enough if you’re disabled, and that you have enough life insurance coverage.
Final note: Manulife publicizes that the odds are 50% that you will have at least one of those three before age 65 (and that for a couple, it’s over 75% that at least one of you will have one) but they don’t tell us what the likelihood is of having two or three of them. I assume it’s a relatively insignificant number of people. Which is actually a positive for the product – I assume it’s likely that you’ll need the coverage for only one of those three concerns, so a low risk that you’ll be reducing your coverage for a second concern.