After I left my 16 year career with a major bank in 2001 to pursue my career with an insurance company, I definitely learned a lot about the different insurances available to individuals and families. I also learned through the media and conversations with people what happens to families financially if they do not have the right kind or the right amount of life insurance, disability insurance, and critical illness insurance.
As I learned about the different products and which made sense for whom, it made me wonder why there isn’t one product that could take care of all three types of insurance during our working life.
Well, finally some insurance company must have been reading my mind!
There is a new product, just announced in June, by Manulife that does just that. You buy one insurance product and you now have life insurance, disability insurance and critical illness insurance and for less than you would pay for the three separate plans.
Here’s an example, a non-smoking, 30-year-old male purchasing $250,000 of this combined insurance pays $54/month and may save as much as 34% over purchasing three stand-alone policies, making it a smart and affordable insurance solution. Even at age 40, this plan is only $79/month and still saving over 30%.
So for a couple cups of coffee a day, you can get all three coverages.
What’s the catch? Well, if you use some of the disability or critical illness insurance, it does reduce the amount of life insurance you have left in the ‘pool’ of insurance.
Let’s say you buy a plan for $250,000. If you should pass away, your family would receive $250,000. If you cannot work because of a disability, you would receive so much per month while you are disabled and then it would stop if you are able to go back to work. Whatever was paid out to you (say $1,250/month for 12 months or $15,000) would reduce the amount of life insurance left.
And if you became seriously ill and you received a critical illness benefit of say $60,000 that would also reduce the future life insurance coverage. Critical illness insurance pays a lump sum benefit for those with serious illnesses who do survive (normally 30 days). The most common claims are for heart attack, stroke, heart by-pass surgery, and cancer.
Basically the way this insurance works: you have a pool of money to receive up to age 65 for disability or serious illness, or at death.
I think it’s a great product for younger (healthier) families to get all three insurances in one product and know they have it when they need it.
Why do I emphasize ‘healthy’? Well, to qualify for disability or critical illness insurance, you need to go through a few more hoops than just for life insurance. That’s because before age 65, you are more likely to have a disability or serious illness than to die. It’s that simple, unfortunately.
This product is ideal for those under 45 that don’t have the three insurances they need: life, disability, and critical illness.
According to statistics gathered by Manulife, about 40% of Canadians don’t have life insurance. What?? And 80% of Canadians don’t have disability insurance! That’s kind of scary! And critical illness insurance is so new that only about 13% of Canadians have some.
On the Manulife website I checked my own risks. As a 46 year old non-smoker female, the likelihood of having a disability before 65 is 32% (that’s one in three!); the likelihood of having a critical illness before age 65 is 18% (that’s one in five!) and the risk of dying before 65 is less than 5%. That’s why I have disability and critical illness insurance as well as life insurance. That’s also why life insurance is the cheapest of the three.
If you are 18 to 45, maybe have some life insurance or not, but don’t have disability insurance or critical illness insurance, find out if this new pool of insurance may work for you. It’s not how much insurance you have that’s important; it’s that you have some!
To find out more, give me a call, or an email, or drop by my new office at 36 Dawson Road, just west of the new Ste Anne Coop. I’ll be moving there about September 20th from my current office at 107 Central.
Anni Markmann is a Certified Financial Planner and tax professional living, working, and volunteering in our community. Contact her email@example.com or at 422-6631 or at 36 Dawson Road in Ste Anne.