Combos are not just a fast food phenomenon.
In a perfect world, resources would be limitless, we’d all have the right amount and type of insurance and our savings would be sufficient and safe.
But as Alan Jackson lamented, “Here in the real world, it’s not that easy at all.” (Insert cheesy country twang here!)
Here in the real world, the best laid plans can often be sidetracked by a simple lack of money. Rarely have I met with a client, presented a plan to move forward and not had to “tweak” that plan at least a little because of a lack of cash flow.
But for even those of us on a budget (which is basically everyone), the industry has taken steps to ensure that protection from real world risks is not out of reach.
How do they do this?
One key way is by bundling more than one need into one “combo” product. One application, one medical, one policy fee and savings that can be as much as 30% versus buying all the products separately.
To some degree, the concept of combining multiple needs into one product is not new. But while the concept is not new, the variations have gotten much snazzier in recent years.
Some of my favourites are as follows:
§ Take a dip in the “Pool” – The concept of this product is simple. You determine an amount or pool of insurance money to draw from and - depending on if you become disabled, suffer a critical illness or die - the benefit is paid out accordingly. An added benefit is that one claim does not cancel out the other, until all the money in the pool has been drained (pardon the pun!).
§ Cover me now, set me up later - This one is geared toward children. It provides critical illness protection throughout a child’s lifetime and offers a tax free return of all premiums paid when they reach age 25. An added bonus is that you can take this refund without cancelling the coverage. I envision this cash helping them with a down payment on their first home or for a wedding gift. Of course, it could also be used to pay off student debt or bail money, but I digress!
§ When I get older, I may not be stronger – This product acknowledges a couple of societal trends: we are working longer and there are fewer people to look after us when we can no longer look after ourselves. This product starts out as a disability plan and can be converted to long term care insurance when the disability coverage ends. Most people in their working prime never consider what will happen when they are no longer able to look after themselves. Furthermore, by the time most of us finally do start thinking about it, we may no longer qualify. I like how this product sneaks that guarantee in the back door without forcing us to consider our mortality right away.
§ “Retire” from a disability – Income from disability insurance is meant to cover your basic living expenses. Emphasis on the word “basic.” In other words, most DI benefits leave nothing left over to poke away for retirement. So you hit age 65, your disability protection ends and then what? Often it means a reduced government income and an even further reduced standard of living. There is a disability policy on the market that - in addition to protecting your income if you are disabled - offers a death benefit, critical illness coverage and will pay 5% of your benefit per year into an RRSP starting in the 18th month of disability.
§ The dynamic duo – Another product geared towards children, this one provides permanent life insurance paid up at age 30. It also includes - at no extra charge - critical illness coverage equal to half the amount of life insurance. Since children pay smoker rates for permanent insurance, if you can prove your child is not a smoker when they reach age 15, the company compensates you for your overpayment of premiums by bumping your benefits up an additional 40% from that point onwards. So your premiums stay the same and your benefits almost double. How sweet is that?
Bottom line: Insurers have gotten very creative in meeting the needs of Canadian consumers. Don’t assume you can’t afford coverage. Have the conversation. Explore your options. And then decide on the combo that works for you.