There's been a movement by the insurance industry to make insurance, whether life, disability or critical illness, easily to obtain. While the concept in great in the abstract, these efforts remind one of the old saying that you get what you pay for in life. Take the following two examples.
Guaranteed issue life insurance policies are life insurance policies aimed at providing access to insurance. You may have heard of this policy in television commercials where insurance is being offered to an older gentleman without the need for a physical or medical questionnaire.
Most guaranteed issue life insurance policies will also insure a holder even if they have pre-existing conditions (cancer, diabetes etc) which typically results in an insurance payout being denied (emphasis on the word "most". Details vary from carrier to carrier). Premiums also will not increase. In other words, this is insurance for the masses- in whatever shape or form.
In return for insuring the potentially uninsurable and not increasing premiums, the policy holder is paying for the insurance company assuming this risk. Most notably, insurance premiums are high. Insurance payouts also tend to be modest ranging from $5,000 to $25,000 (although some policies pay as much as $125,000) – IF you survive a period of time after obtaining the policy. A policy holder typically has to live 2 years in order to qualify for the death benefit. Otherwise, the death benefit is only the return of premium.
In summary, the uninsured are not uninsurable but at a cost.
Example 2 deals with Manulife's Synergy policies. Quite simply, it is a 3 in 1 product which provides life, disability and critical illness insurance in 1 policy. The insurance brokerage industry loves the product since it is being sold as a cost saver. Some insurance agents are selling the product as helping to shave 30% off purchasing each insurance policy individually.
However… you get what you pay for in life. As this fee-based financial planner points out, disability coverage is limited to 2 years (rather than up to 65 on many disability policies), the maximum payout is $500,000 (which sounds like a lot but, if you are relying on the disability and critical illness policies, can be used quickly) and there are age limits.
Is the product a cleverly designed product? Yes. But, one should avoid buying it solely as a cost savings vehicle and look to see whether it fits the contextual need.
As always, one rarely gets to have their cake and eat it too. These products are designed to meet certain market needs but come with a cost. Conduct your due diligence and proceed cautiously.