Product review: Manulife Synergy

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Manulife Synergy

In our first product review, we looked at an alternative product to term and permanent life insurance called LifePhases and LifePhases Plus, from Assumption Life. Last week, we analyzed Industrial Alliance’s Child Life and Health Duo. To continue the series, this week we’ll review Manulife’s Synergy, a relatively new product launched in 2011.

Like Child Life and Health Duo, Synergy is a type of combination insurance. On top of the life and critical illness that the former provides, Manulife Synergy is a 3-in-1 product that includes disability insurance. The main selling points of Synergy is the fact that you receive insurance protection for the three most important common types of insurance: life, critical illness and disability. You can go through each of those pages to see their impact that each event has on your family’s finances. Synergy is unique in that there are no other products like this in the Canadian marketplace. Let’s examine the features of Manulife Synergy.

Features of Manulife Synergy

Synergy is a type of term insurance, where the policy expires at age 65 assuming premiums have been paid up to that point. The issue age is between 18-50, so Synergy is specifically targeted at young families. The two options that can be selected are term-10 and level cost to age 65. The coverage amount ranges from a minimum of $100,000 to a maximum of $500,000. Sample premiums comparing term-10 and level cost to age 65 will be provided near the end.

As a type of combination insurance, all three solutions are packaged together into a single plan and are inseparable. A critical illness claim pays out 25% of the chosen amount of coverage. A disability claim pays out 0.5% of the chosen amount of coverage per month (after satisfying a waiting period of 90 days) while the insured is disabled. The life insurance claim pays out 100% of the chosen amount of coverage.

In order to claim for disability, the insured must not be able to work in his regular occupation because of illness or injury. The disability must be continuous for a period of 90 days before the benefit payments start. Premiums are waived during the disabled period. As for critical illness, there are 22 covered illnesses in Synergy. They include:

  • Alzheimer’s disease
  • Aortic surgery
  • Benign brain tumour
  • Blindness
  • Cancer
  • Coma
  • Coronary artery bypass surgery
  • Deafness
  • Heart attack
  • Heart valve replacement
  • Kidney failure
  • Loss of limbs
  • Loss of speech
  • Major organ failure and on waiting list
  • Major organ transplant
  • Motor neuron disease
  • Multiple sclerosis
  • Occupational HIV infection
  • Paralysis
  • Parkinson’s disease
  • Severe burns
  • Stroke

In addition to the 25% claim for these critical illnesses, Synergy will pay 6.25% as an ‘early intervention benefit’ for these conditions: coronary angioplasty, ductal carcinoma in situ of the breast and stage A prostate cancer. It will also pay 10% of the chosen amount of coverage to a maximum of $10,000 as a ‘recovery benefit’, which is a way to advance part of the payment to help deal with the early stages of treatment, before the main critical illness claim is approved.

Manulife offers its Health Service Navigator to all clients, regardless of whether or not they have made a critical illness claim. It is an integrated health information and online resource centre with access to information about the Canadian health care system and a second medical opinion service.

An added bonus of Synergy is the bereavement counselling assistance. It reimburses the beneficiaries up to $1,000 for counselling expenses due to the passing of the insured.

If the insured has not suffered from a critical illness by expiry, he has the right to purchase a permanent life insurance policy without medical evidence of insurability. Many term life insurance products also include this feature at no further cost.

Benefits from a pool of money

The available amount of insurance is treated as a pool. That is, each time Manulife pays a claim, it reduces the amount in the pool. For example, consider a Synergy policy with $100,000 of available amount of insurance. The insured suffers from cancer and 25%, or $25,000, is paid as a critical illness claim. After recovering, he is then disabled for 12 months (after the waiting period) and receives $6,000 from Manulife. Finally, he passes away and his beneficiary receives what remains in the pool, which is $69,000 ($100,000-$25,000-$6,000). Any amount paid from the recovery benefit and second and subsequent instances of the early intervention benefit also reduces the amount in the pool.

A critical illness claim can only be paid once, while a disability claim may be paid multiple times, as long as there is still money remaining in the pool.

The pool of money approach provides different benefits than owning three standalone policies. Because the pool is reduced each time there is a claim, Synergy is more affordable than owning three standalone policies. You also save money from having to pay three separate annual policy fee.

Is Synergy right for you?

For a 35 year-old male non-smoker, there is a 6% chance of dying before age 65 (1), 34% chance of disability before age 65 (2) and 26% chance of critical illness before age 65 (3). The probability of dying, becoming critically ill or disabled before the age of 65 is 50%. While most Canadians understand the importance of insurance, very few have all three types of insurance in place. Probabilities for other ages for male and female smokers and non-smokers can be found here.

Manulife Synergy offers young Canadians an affordable option to have coverage for all three types of insurance. With rent or mortgage payments, credit card bills, saving for retirement and other expenses, it’s especially important that they purchase a product that fits into their budget. Just how much will Synergy cost? Below is a table of premiums for term-10 Synergy:

AgePremium, MalePremium, Female
20$86.24$104.58
30$94.16$121.66
40$139.16$211.66
50$334.99$347.91
Initial monthly premium for term-10 Synergy for non-smokers at different ages, based on $500,000 chosen amount of insurance. This will provide $2,500 of disability monthly benefit, $125,000 of critical illness benefit and $500,000 of life insurance benefit. Because it is a term product, premiums will increase every 10 years, until it expires at age 65. Premiums are current as of March, 2014.

 

Here is a table of premiums for level cost to age 65 Synergy:

AgePremium, MalePremium, Female
20$132.91$163.33
30$172.08$205.83
40$251.66$295.83
50$404.16$408.74
Monthly premium for level cost to age 65 Synergy for non-smokers at different ages, based on $500,000 chosen amount of insurance. This will provide $2,500 of disability monthly benefit, $125,000 of critical illness benefit and $500,000 of life insurance benefit. Premiums are level until expiry at age 65. Premiums are current as of March, 2014.

 

As a term product, premium on the term-10 coverage will increase once every ten years. Like other term versus level cost products, term is always more affordable in the initial years. After the first or second renewal, the premium increases to higher than the level cost product. The same applies to Synergy. When planning for a long-term commitment such as Synergy, it’s important to consider if the term product is affordable in your 50s or 60s. Even though the level cost to age 65 has a higher initial premium, you’ll be more likely to keep it in force than term-10 Synergy.

If you already have some individual or group life and disability insurance, using Synergy to supplement it may ensure you have enough coverage. Because the amount of coverage is limited to $500,000, Synergy may need to be supplemented by adding a term insurance rider, depending on the need. Synergy can also be used as a replacement for mortgage life insurance.

If you have a family to take care of and don’t have a plan in place to prepare for premature death, disability or critical illness, maybe it’s time to give Synergy a look.

References:

1. Mortality probabilities are based on the Canadian Institute of Actuaries’ CIA9704 sex and smoker distinct mortality tables.

2. Disability probabilities are based on the 1985 Commissioner’s Individual Disability Table A sex distinct incidence tables for Occupation class 2A, 90 day waiting period.

3. Critical illness probabilities are based on combined incidence rates for cancer, heart attack (myocardial infarction) and stroke from population studies by Statistics Canada (“New cases for ICD-O-3 primary sites of cancer: 2002-2007”) and the Heart and Stroke Foundation of Canada (“The Growing Burden of Heart Disease and Stroke in Canada 2003”).

Source:

Manulife Synergy website

Product guide

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