Uninsured Life Insurance: Diabetes And The Coverage Gap

While diabetes is a pre-existing condition that can make it more difficult to get life insurance, it does not disqualify you from getting coverage. However, the type of diabetes you have and how well you manage your condition will impact the cost of your premiums.

People with Type 1 diabetes may face higher premiums than those with Type 2 diabetes, as it is often perceived as a higher risk due to the need for constant monitoring and insulin therapy. Type 2 diabetes is usually considered lower risk and more manageable through lifestyle changes and medication.

The timing of your life insurance application can also impact the policies and rates available to you. For example, it may be more cost-effective to apply for life insurance before developing diabetes or after your gestational diabetes has resolved. Demonstrating that your diabetes is well-controlled can also help you get lower rates.

Life insurance for Type 1 and Type 2 diabetics

Having diabetes doesn't disqualify you from getting life insurance. However, several factors come into play when determining eligibility and premium rates. This article will discuss the process of obtaining life insurance as a diabetic, the key features of such policies, and the benefits they offer.

Eligibility and Premium Rates

The type of diabetes, control, management, and lifestyle factors all influence eligibility and premium rates. Type 1 diabetes is often considered a higher risk due to its early onset and the need for insulin management, leading to higher premiums. On the other hand, Type 2 diabetes is generally perceived as lower risk, especially if managed well with lifestyle changes and medication.

Insurers will assess how well blood sugar levels and HbA1c readings are controlled and also take into account overall health and any related health conditions, such as heart disease or kidney problems. Lifestyle factors like diet, exercise, smoking, and alcohol use will also be considered.

Underwriting Process and Policy Terms

The underwriting process for diabetics involves a thorough assessment of the individual's health condition, including detailed medical histories and treatment regimens. Medical exams are often required to determine the impact of diabetes on the body.

Premiums for diabetics are typically higher than standard policies but vary based on the severity of diabetes, the effectiveness of management strategies, and overall health. Policy terms, such as the sum assured and term length, may differ from standard policies and are tailored to the diabetic individual's risk profile.

Some policies include waiting periods before certain benefits, especially those related to diabetes complications, become available. Additionally, policies for diabetics often include relevant riders, such as critical illness cover.

Benefits of Life Insurance for Diabetics

Life insurance for diabetics offers several advantages:

• Financial security for loved ones in case of an unfortunate event
• Encourages better health management by incentivising healthy practices
• Provides financial support for diabetes-related treatment costs
• Offers peace of mind, knowing that you and your family are protected financially
• Many insurers offer plans specifically designed for diabetics, ensuring suitable coverage for their unique health situation

Choosing the Right Policy

When selecting a life insurance plan as a diabetic, consider the following:

• Opt for comprehensive coverage that takes into account potential future health complications
• Look for affordable premium rates, balancing coverage and cost
• Choose plans with beneficial riders, such as critical illness or waiver of premium benefits
• Seek flexibility in policy terms, premium payment frequency, and sum assured adjustments
• Choose a credible insurer with a good reputation and a high claim settlement ratio

Tips for Buying Life Insurance for Diabetics

• Be completely honest about your diabetic condition, management strategies, and health history to avoid issues with policy claims
• Ensure the policy provides adequate coverage for potential future health expenses
• Compare different policies, considering benefits, premiums, exclusions, and policy terms
• Understand the terms and conditions, especially those related to diabetes
• Choose an insurer with a high claim settlement ratio for added reliability
• Consult a financial advisor if needed to find the most suitable policy for your unique needs

The impact of diabetes on life insurance premiums

People with pre-existing conditions often face difficulties in obtaining a life insurance policy. However, diabetes does not automatically disqualify someone from getting life insurance coverage. While it is possible for diabetics to obtain life insurance, they often have to pay more than a person without a pre-existing condition. The extent to which diabetes impacts life insurance premiums depends on several factors.

Type of diabetes

Insurance companies often distinguish between Type 1 and Type 2 diabetes when assessing eligibility and determining premium rates. Type 1 diabetes is usually more difficult to control and often requires insulin therapy from an early age, therefore carrying a higher risk. As a result, people with Type 1 diabetes may face higher life insurance premiums compared to those with Type 2. Type 2 diabetes is more common and usually develops later in life. If it is well-controlled through lifestyle adjustments and medication, more favorable premium rates can be expected.

Health factors

Insurers will also take into account the policy applicant's overall health when determining premiums. They will consider factors such as blood pressure, cholesterol levels, and any diabetes-related complications. The better managed the diabetes is, the more favorable the premium rates are likely to be.

Type of life insurance policy

The type of life insurance policy chosen can also impact the cost. Term life insurance policies, which provide coverage for a specific period, typically have smaller premium payments than permanent life insurance policies. Permanent policies, such as whole life insurance, are generally more expensive but offer lifelong coverage and can build cash value over time.

Medical underwriting process

The medical underwriting process, which may include a medical questionnaire, a physical exam, and a review of health records, can also impact the cost of life insurance for diabetics. This process helps insurance providers determine a fair insurance rate based on the specifics of the applicant's health and the type of diabetes.

In summary, while diabetes can impact life insurance premiums, the extent of the impact depends on various factors, including the type of diabetes, the individual's overall health, the type of life insurance policy, and the medical underwriting process. It is important for diabetics to shop around and work with experienced insurance agents to find the most suitable policy for their needs.

The underwriting process for diabetics

Underwriting refers to the process by which insurance companies assess an individual's health profile and potential liability to determine eligibility and premiums for life insurance coverage. Underwriters are licensed professionals who work for specific insurance companies and follow their guidelines to evaluate applications.

Types of Underwriting:

There are four main types of underwriting processes that diabetics may encounter when applying for life insurance:

• Fully Underwritten Policies: These policies require applicants to provide detailed health information, including diabetic history, and undergo a paramedical examination. The underwriter will review lab results, medical records, and other health data to determine the applicant's risk and assign a rating that affects premiums. This process can take 3-4 weeks.
• Simplified Issue Policy without Medical Records: Also known as "Non-Medical Exam Life Insurance Policies," these policies do not require a medical exam or blood/urine samples. Instead, applicants complete a health survey and answer medical questions. The underwriter will also conduct background checks, such as a prescription history, to determine eligibility. Approval or denial decisions are usually quicker, sometimes made within minutes to a few days.
• Simplified Issue Policy with Medical Records: Similar to the previous type, this policy does not require a medical exam. However, underwriters will review the applicant's medical records from the last 3-5 years and may also request a health questionnaire. This process allows underwriters to make more nuanced offers, ranging from Preferred to Table Rated. It typically takes longer, depending on how quickly medical records can be obtained.
• Guaranteed Issue Policies: These policies guarantee approval with no health questions or medical underwriting. They are often a last resort for individuals in poor health or with serious health issues. Premiums are much higher, and the full death benefit is usually not paid out until the policy is two years old. If the insured dies within the first two years, the beneficiary receives the premiums paid plus interest.

Factors Considered by Underwriters:

Underwriters will consider various factors when evaluating diabetics for life insurance. These include:

• Type of diabetes (Type 1 or Type 2) and age of diagnosis
• Medications taken for diabetes
• Control of diabetes and A1C levels
• Presence of any diabetes-related complications
• Overall health, including weight, height, age, and lifestyle factors
• Hobbies and travel habits
• Occupation and income
• Existing life insurance coverage
• Smoking, alcohol consumption, and recreational drug use

Sample Life Insurance Ratings for Diabetics:

Underwriters may assign ratings to diabetic applicants based on their health profile and level of risk. These ratings affect the premiums they will pay. Here are some sample ratings:

• Preferred: Typically given to diabetics diagnosed after age 50 with A1C levels below 7.3 and no significant health issues. Very few diabetics qualify for this rating.
• Standard: Often assigned to Type 2 diabetics diagnosed after age 30 with good control of their condition and A1C levels. Some Type 1 diabetics may also receive this rating if diagnosed as an adult and with a healthy overall profile.
• Table Rated: Applied when the diabetic is struggling to control their condition, has complications, or other significant health issues. Each Table Rating increases the premium by 25%.

Tips for Diabetics Seeking Life Insurance:

• Work with an independent insurance agent who is experienced in working with diabetic clients and can guide you through the process.
• Compare quotes from multiple insurance companies, as underwriting criteria and rates may vary.
• Consider making lifestyle changes, such as quitting smoking and improving overall health, to lower your risk profile and potentially qualify for better rates.

The types of life insurance available to diabetics

People with diabetes have several life insurance options available to them, but it is recommended that they first apply for traditional life insurance before considering a guaranteed issue policy. This is because standard policies typically offer more coverage for a lower price.

Term Life Insurance

Term life insurance is coverage that lasts for a certain period, usually between 10 and 30 years. Because it is not designed as lifelong coverage, it is typically one of the more affordable options.

Whole Life Insurance

Whole life insurance is a type of permanent life insurance that includes a death benefit and a cash value component that accumulates over time. These policies are usually more expensive than term life insurance but are designed to guarantee a death benefit payout as long as the terms of the policy are met.

Universal Life Insurance

Universal life insurance is another type of permanent life insurance that includes a death benefit and a cash value component. It is one of the most flexible types of life insurance policies because the insured can adjust the death benefit or use the cash value component to pay the premium. There are three main types of universal life insurance: indexed universal, variable universal, and guaranteed universal, each using different investment strategies to grow the cash value.

Guaranteed Issue Life Insurance

Guaranteed issue life insurance does not require a medical exam, but it comes with higher premiums and lower coverage limits. This may be an option for those who are facing significant health challenges and have been denied coverage elsewhere.

Group Life Insurance

Group life insurance is often offered through an employer and can be a good option for people with diabetes. It is generally easier to qualify for and may offer lower rates since the risk is spread across a larger group.

How to reduce the cost of life insurance as a diabetic

While having diabetes does complicate the process of getting life insurance, it is still possible for diabetics to obtain life insurance. However, they may have to pay more than a person without a pre-existing condition. Here are some tips on how to reduce the cost of life insurance as a diabetic:

• Get insured before developing diabetes: If you already have a life insurance policy before you develop diabetes, your premiums will generally be cheaper than if you try to get life insurance after you've been diagnosed.
• Wait for gestational diabetes to resolve: Gestational diabetes is a temporary condition that usually goes away after giving birth. Pregnant women with gestational diabetes may want to wait several months after giving birth before applying for life insurance. Assuming the diabetes goes away, it will be easier and cheaper to get a life insurance policy.
• Wait until your diabetes is under control: If you can demonstrate that you're in good health and managing your diabetes well, you may get more coverage options and lower prices. For example, keeping your blood glucose and A1C (glycohemoglobin) levels stable and within the recommended range for a year may result in more favourable rates.
• Choose term life insurance: Term life insurance is more affordable than permanent life insurance and provides coverage for a set number of years. It is a good option for those who have their diabetes under control.
• Stay on top of your diabetes: Seeing your doctor regularly, taking your medication, eating a healthy diet, and maintaining an active lifestyle will help you manage your diabetes and improve your chances of getting better life insurance rates.
• Shop around: Different insurers weigh diabetes differently, so it's worth comparing quotes from multiple companies to find the most competitive rates.
• Use a broker: Some life insurance brokers specialise in high-risk applicants and can help you find the best options for your situation.
• Research insurers with wellness programs: For example, John Hancock's Aspire program is designed for people with diabetes and offers a premium discount of up to 25% for healthy habits.

Frequently asked questions