As Canadians looking for insurance to protect our families from loss, we’re blessed with the number of insurance companies offering innovative products and solutions. Here at Brian So Insurance, we want to discuss and review these specialty products. For the most part, basic products such as term and permanent do not vary widely among carriers. So what we want to delve into here are specialty products, such as LifePhases and LifePhases Plus by Assumption Life. These are usually offered only by one carrier to differentiate themselves from the rest of the pack. They can be combination type insurance, mixing life and different types of health insurance together as a package. For this post we are going to talk about Child Life and Health Duo, a combination type insurance that incorporates life and critical illness insurance into one policy. Child Life and Health Duo is a unique product offered only by Industrial Alliance.
Features of Child Life and Health Duo
The Child Life and Health Duo is a type of whole life insurance with temporary critical illness coverage. It’s designed for children, with the issue age ranging from 15 days to 20 years. Premiums are level and payable until the age of 30, at which point the policy is paid up, meaning no further premium is needed to keep the policy in force. Only the life insurance portion is permanent; the critical illness part expires at age 30. If a child suffers from 1 of 32 illnesses listed in the policy before the age of 30, half of the benefit will be paid out tax-free to the parent. The remaining half will be paid whenever the child later passes away. If the child never suffers from a covered illness, the whole face amount will be paid when the child passes away.
Although critical illness coverage expires at age 30, Industrial Alliance does allow conversion into a permanent critical illness plan without evidence of insurability. This conversion opportunity is available between the ages of 18-30 and premiums are based on the insured’s age at the time of conversion. The covered illnesses include:
- Cerebral vascular accident
- Motor neuron disease
- Alzheimer’s disease
- Aplastic anemia
- Occupational HIV
- Major burns
- Cancer
- Blindness
- Aortic surgery
- Coma
- Heart attack
- Kidney failure
- Bacterial meningitis
- Loss of speech
- Paralysis
- Parkinson’s disease
- Loss of independent existence
- Dismemberment
- Coronary artery bypass surgery
- Heart valve replacement
- Multiple sclerosis
- Deafness
- Major organ transplant
- Major organ failure on waiting list
- Brain tumor
To total 32 covered illnesses, critical illness insurance also includes the following medical conditions until the insured’s 25th birthday:
- Congenital cardiac defects
- Type 1 diabetes
- Muscular dystrophy
- Cystic fibrosis
- Cerebral palsy
- Autism
- Rett’s syndrome
Most payments are made after a 30 day waiting period is satisfied. The exceptions are paralysis and multiple sclerosis, which requires 90 days, and occupational HIV and loss of speech, which requires 180 days. Autism must be diagnosed before the age of 3 to qualify.
A payment equal to 10% of the face amount (up to $50,000) is made if the child suffers from one of the following non life-threatening conditions:
- Coronary angioplasty
- Skin cancer (malignant melanoma into the dermis at a depth of 1.0 mm or less)
- In situ breast cancer
- Stage A prostate cancer
An added bonus to Child Life and Health Duo is that the amount of coverage increases by 40% at the age of 15 for no increase in premium. For example, if the total face amount is $100,000 for death and $50,000 for critical illness, it will increase to $140,000 for death and $70,000 for critical illness at age 15. Although this bonus is not automatic, all you have to do is show Industrial Alliance that the covered child is a non-smoker and proof of insurability is satisfactory. This basically means the child hasn’t started smoking and is still in good health. The bonus is a way for the insurance company to reward healthy individuals.
The insured also has other means of increasing the coverage. The policy has a built in guaranteed insurability rider, which allows the face amount to be increased at age 20, 25 or at marriage, the birth of a child or completion of post-secondary education.
As with other whole life insurance products, a guarantee surrender value is provided. You can surrender the policy (stop paying premiums) and receive cash in return. The amount of cash is proportional to the number of years the policy was in force.
Preferred rates are available for face amounts of $200,000 and above. If the child displays excellent health beyond the average population, he or she will have a reduced premium charged. Here is a table of standard monthly premiums based on $100,000 coverage:
| Age | Premium, Male | Premium, Female |
|---|---|---|
| 0 | $46.8 | $40.05 |
| 5 | $52.38 | $43.83 |
| 10 | $68.13 | $58.14 |
| 15 | $90.09 | $65.97 |
| 20 | $128.79 | $105.48 |
Why you should consider Child Life and Health Duo
We’ve previously written about insurance on children and whether or not it is necessary. In that post, we noted that even though a child is not an income earner of the family, a tragedy striking him/her will have a huge affect on the whole family’s finances. The parents will likely have to take an extended leave of absence from work (In BC, an employee is entitled to only 3 days of unpaid leave following the passing of an immediate family member). During this time, the insurance payout can ensure the parents have proper time to grieve or take care of the child who suffered from a critical illness. The critical illness payout can also cover medical costs not insured by MSP, while the death benefit can cover funeral costs.
There’s also the issue of evidence of insurability. As we age, we generally acquire more chronic ailments that can reduce our access to life and health insurance. By locking in insurability at a young age when most are healthy, the problem of insurability can be avoided.
By having the premiums paid up at age 30, you can transfer ownership of the policy to your child when he/she reaches adulthood. Not having any more premiums to pay and keeping lifetime coverage would be a gift that he/she would truly be grateful for.
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