"Combined insurance" is a term used to describe supplemental insurance purchased to fill in the gaps left by other insurance policies. Traditional life insurance offers a cash payment to designated survivors when the policyholder dies. Life insurance can be combined with other types of policies to design individualized coverage to meet the needs of families, as well as those of the insured in emergency situations.
Motivation
The motivation for the insured is to provide future coverage for significant others if the insured is no longer able to support family members. Life insurance provides a cash payment. Policies may also have a clause that allows for payment if the insured is disabled. The determination of permanent disability may require a lengthy procedure.
Life insurance policies include a provision for borrowing worth, but removing funds may also require a lengthy procedure, depending on the policy wording and the way it was originally designed. Supplemental insurance offers a way to cover each of these gaps.
Types
Life insurance may be combined with various other insurance policies. Packages pair life coverage with long-term disability and health coverage for specific diseases, such as cancer. Accident insurance is another combination package that provides extra coverage for hospitalization, surgery and even home care.
Combined insurance can also include extra health coverage for diseases that typically have high costs for both treatment and recovery. Supplemental life insurance can also be part of a possible combination package to extend coverage on less-valuable policies.
Costs
The premise of combined life insurance rests on the inadequacy of other insurance policies. Companies offering combined products typically tout uncovered expenses and high premiums. Potential buyers must evaluate both the cost and the potential benefits.
Costs for supplemental health and life policies are based on actuarial tables that predict average life expectancy for the age of the holder when the policy is purchased. Younger buyers pay over a longer period of years when the policy is taken out at an early age, but older applicants have higher insurance premiums. Examination of age tables allows careful evaluation of the total cost of combined packages.
Benefits
Life insurance combinations must be examined carefully to determine the benefits to the policyholder. The "New York Times" reported in September 2009, that "...policyholders often let their life insurance lapse before they die, for a variety of reasons." The motivations for buying insurance include minor children, but as the children age, it may not be necessary to retain the life insurance policy after they find jobs of their own to provide for the future.
Large policies that incorporate life and other insurance protection are expensive and, as a person ages, especially after retirement, the holder frequently is not able to pay the premiums, according to the "New York Times."
Expert Insight
One major medical event is enough to force many people into bankruptcy, even with health insurance coverage, so combined packages can be beneficial. An article in the "American Journal of Medicine" in 2009 found that 62 percent of all bankruptcies were related directly to medical costs--even though 3/4 of this group had health coverage. Persons considering combined life policies need to examine such policies carefully to ensure that the extra coverage adequately fills in specific gaps, and that the coverage is in writing.
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