Applying for life insurance is not a terribly complicated process for people who have only minor health issues. On the other hand, for people who have more serious issues with their health it can be a much more arduous process. In particular for people who suffer from either type of diabetes type 1 or type 2. Their are unique challenges presented by both types of diabetes when one is trying to secure a life insurance policy with competitive pricing.
Those who have diabetes should be prepared for different pricing, requirements, and products, than people without the disease whose body has the ability to maintain their insulin levels normally. Also, with both types of diabetes you can expect varying conclusions from life insurance companies as each them view type 1 and type 2 a bit differently.
The good news for diabetics is that it is possible to get coverage. Over the years, we've talked to so many people with diabetes who think they have no chance of securing a life insurance policy…not true. Yes, it is a bit more complicated and the details will matter but if you are patient with the process, work with an agent who understands the underwriting process, and most importantly you apply with an insurance company that understands how to underwrite diabetics, you increase your chances of being covered.
It's All About Risk: Why Diabetes Matters
A key point to keep in mind when applying for any life insurance policy is that the premium generally reflects the risk associated with insuring you–the policyholder or policyowner (if you're being insured with a mutual company). People who provide a lower degree of risk to the insurance company, by being generally in good health, have no avocations like base jumping from skyscrapers in Panama and ultimately seeming as though they aren't likely to die before their life expectancy, are rewarded with the lowest cost or rates.
Ironic isn't it? We (the life insurance company) will give you really affordable insurance based on the fact that we think we'll never have to pay a claim for you. But, that's how insurance works in general whether it be car, home or life. However, for the people who need the death benefit provided to their family if they die prematurely, paying a greater premium due to increased risk factors remains to be a fair trade financially speaking.
There's little doubt that people who suffer from diabetes, both type 1 and type 2 pay significantly higher life insurance premiums, specifically if they haven't followed the instructions and/or advice given by their attending physician. Life insurance companies would like to see evidence of someone diagnosed with diabetes as having made a serious effort to control the disease. Often times this will include following dietary changes, consistent exercise regimen and certainly a cessation of smoking if the person was a smoker before their diagnosis. Generally speaking–they want to see that you actually care and are doing everything in your power to manage the disease.
To be sure, the insurance company you apply with will complete their own evaluation of the condition, most often to include a complete physical exam with a complete lab workup in addition to attending physician statements (i.e. medical records). The insurer is attempting to ascertain whether the applicant is actively maintaining health glucose and insulin levels in relation to their diabetes.
How Underwriters View the Risk
I should start by saying everything I'm writing in this section is coming directly from underwriting guidelines and commentary on underwriting from life insurance companies themselves. This is not conjecture on our part, this info comes straight from the source. Each company has a slightly different view on diabetes and the metrics that they use to measure control and/or severity. We are seeking to publish general guidelines but please contact us if you'd like to get more specifics about your particular situation.
Over time, diabetes takes its toll on the vascular system of the body. There can be long term “end organ damage” that can be seen in the eyes (retinopathy), kidneys (nephropathy), the heart (coronary artery disease), and the peripheral nerves and vasculature (peripheral neuropathy). The longer diabetes is present, the greater the likelihood of complications, hence, younger applicants with type 1 diabetes will be considered but typically be highly rated and pay higher premiums. Middle-aged applicants with a more recent onset and who display good control may be eligible for coverage with a small rating or could even be issued at standard rates.
The better the control, the longer complications can be delayed, if not entirely avoided. Control of diabetes is often measured using A1c (or HbA1c). An A1c less than 7 is an indication of good control; and A1c of greater than 10 indicates poor control. The higher the A1c, the greater the risk of long term complications and thus the greater mortality rating is placed on the policy by the life insurance company.
Additional Risk Factors
Excess weight, smoking, and elevated blood pressure or cholesterol increase the risk associated with diabetes.
Examples to Consider
Larry, a 52-year old salesman, was diagnosed with type 2 diabetes about two years ago. Under his doctor's supervision, Larry lost weight, exercises on a regular basis, and has improved his A1c from 7.9 to 5.8 in the last 18 months. What's the underwriting decision? Some carriers would give Larry a standard rate offer based on the fact that he's really working to control the disease, he's following the guidance from his physician and he's been able to maintain good A1c levels.
Linda is a 41 year old stay-at-home mom who was diagnosed with type 2 diabetes about 10 years ago. She does see her doctor for follow ups on a regular basis and her A1c is 6.5. However, her blood pressure stays around 125/70 and her LDL is 95 (low for those without diabetes but a bit elevated for those with diabetes). What's the underwriting decision? Most likely Linda will have a rating of some sort, perhaps table 2 but that's really dependent on the insurance company and the type of policy she is applying for.
The Type of Policy Matters?
Yes it does. In the above example with Linda, she might get table 2 rating if she's applying for term insurance, however, if she was applying for a universal life insurance policy with the same company they may be willing to give her standard rates. Some life insurers will give you an automatic bump up in rate class for buying a product other than term insurance. Something to consider and something your agent should be aware of.
Application Process Will be Long, and Must be Executed Properly
If you have diabetes, it's crucial to work with an agent who will shop your policy around and who knows how to best present your case to an underwriter. By going through the disclosure and shopping process, you can narrow down where you'll most likely be able to find affordable coverage, furthermore, it weeds out the companies that will not be interested in issuing a policy for you before you apply. The more information your agent has up-front about your diabetes, the better chance you have of getting a policy that's affordable.
The process before the application is critical as you don't want to chase coverage from one company to the next after you've been declined by one or two insurers. Now, there are times that this happens but we'd always prefer to be proactively looking for the companies that are interested in you as opposed to being forced into playing defense because your application was initially sent to a company that would have never have approved you in the first place.
We can help you navigate this process and get you through it, it just requires a bit of skill on our part and a lot of patience on yours.
Brantley is a practicing life insurance agent and has been for over 18 years. After years of trying to sell like his sales managers wanted him to, he discovered that people want to buy life insurance if you actually explain the benefits.