The number of people living with diabetes in the UK exceeded the 4 million mark for the first time this year. Future Proof CEO David Mead shares case studies of arranging life cover for diabetes.
What is diabetes?
Diabetes is a lifelong condition that causes a person's blood sugar level to become too high.
There are two main types of diabetes: Type 1 diabetes which develops when the insulin-producing cells in the body have been destroyed and the body is unable to produce any insulin and Type 2 diabetes which develops when the insulin-producing cells in the body are unable to produce enough insulin, or when the insulin that is produced does not work properly.
There are a number of medical conditions linked to diabetes, which it can go on and lead to, including: heart disease and stroke; kidney disease; nerve damage; amputations and vision loss.The number of people living with diabetes in the UK has exceeded the 4 million mark for the first time, according to figures from Diabetes UK.
This figure has more than doubled since 1996, when there were 1.4 million. By 2025, it is estimated that five million people will have diabetes in the UK.
Type 1 diabetes accounts for about 10 per cent of all adults and Type 2 diabetes accounts for between 85 and 95 per cent of all people with diabetes.
Arranging Life Insurance with Diabetes
Often people diagnosed with Diabetes feel that life insurance is out of their reach and opt for guaranteed acceptance Over 50's plan which are often advertised on daytime TV.
These plans are useful if a customer is suffering with a serious illness such as a high grade of cancer or heart disease and are not concerned with waiting 12 to 24 months before the full cover becomes valid.
The good news is that people diagnosed with diabetes should be able to get life insurance cover, and sometimes it will be available on standard terms, however it is more common for premiums to be loaded or rated (50%-150% increase on premiums would be fairly typical).
The final ‘underwritten' premium will depend upon several factors, such as their last HbA1C reading, height and weight (BMI), blood pressure and cholesterol levels, and any other related medical issues or complications. There will be a significant impact upon the ‘loading' if a person with diabetes is also a smoker.
We assess each case based on its own merits and undertake full research to ensure the most appropriate cover is secured for a client based on their requirements and budget.
Many customers assume all life insurance companies are alike and assess risk in the same manner. We stress that being diagnosed with diabetes does not mean customers are unable to arrange life cover, but it is important that they receive expert advice to ensure they secure the best cover at the most competitive price.
In terms of other types of cover, Critical Illness is only available for customers with diabetes in exceptional cases. We have secured CI cover for customers but this is age dependent and the cover is only offered by a limited number of insurance companies.
Unfortunately, Income Protection is not available to people with diabetes.
Case Study - 58 year old male with type 2 diabetes with a very high BMI
We were approached by our customer who had recently moved house and required a life insurance policy for him and his wife to cover their mortgage (both age 58 and non-smokers). We recommended a joint decreasing term life insurance policy with an initial sum assured of £79,000 over a term of 17 years which was the lowest costing option to cover their mortgage, to match their budget.
Our customer informed us that they had already applied for a policy via their mortgage broker and had been quoted £55.04 per month. This was not the lowest premium on the market but the mortgage broker was only able to offer policies from one provider.
Our client was diagnosed with Type 2 Diabetes at age 53 and had been prescribed metformin. He also has a BMI of 41.7 (6' and 22 stone). We advised that all insurance providers will add a ‘rating' to the quoted premium due to his medical background. The Insurance Provider recommended by the mortgage broker increased the quoted premium from £55.04 to £143.00 a month.
We contacted all Insurance Providers to see how they would treat an application for our client.
Following research, we recommended the insurance provider who offered the most sympathetic terms. Although they quoted a premium of £41.70, the final premium after underwriting was £80.14.
Our clients were extremely pleased with the outcome of our research as the policy is over 40% less compared to the policy previously arranged by their mortgage broker.
They have been able to save £12,823 in mortgage premiums over the term of their mortgage.
Case Study - 60 year old male with type 2 diabetes
We were recently approached by a 60 year old gentleman who wanted to review his life insurance arrangements. He had arranged a life insurance policy three years earlier which offered a sum assured of £30,000 over a term that would expire at age 65 at a cost of £23.19 per month.
Our client told us that he had given up smoking over a year ago and wanted to know whether he could obtain life insurance over a longer period for a similar premium to his existing policy.
Generally this would be the expected outcome but in our client's case, his existing premium did not seem to reflect his medical history.
Our client had been diagnosed with type 2 diabetes aged 44 years. Although his condition is well controlled with metformin, all insurance providers are expected to increase (load) the standard premium by at least an additional 50%.
It transpired that the medical condition was not disclosed on the original application by the broker who arranged the policy.
We recommended that our client should inform his insurance provider immediately of the correct medical details. They re-evaluated his application and increased the premium from £23.19 to £34.00.
Furthermore, they asked for an immediate payment of the shortfall in premium since his plan began, amounting to nearly £350.
We advised our client to apply for a replacement policy on non-smoker's rates. He was pleased to obtain a new plan with a sum assured of £30,000 over a term which runs until he is 80 years for a premium of £38.59 a month. He started the new plan without the need to pay the underpaid premiums on the original policy.
Case Study - 72 year old male with type 2 diabetes, diagnosed aged 52
Our customer contacted us to enquire about Whole of Life insurance to cover funeral expenses. They had previously applied for a guaranteed acceptance ‘Over 50s plan' as advertised on TV.
They still had another 6 months to wait before their ‘waiting period' expired and had been paying £40 a month for the previous 18 months, a total of £720 of wasted premiums.
We managed to arrange the same amount of cover (£5,000) within 48 hours for £22 per month. The cover was accepted by the insurer immediately without the need for a report from the customer's GP.
As an added bonus the new policy has an index linked option which will help protect the benefits against the effects of inflation.
Case study: 68 year old male with type 2 diabetes
Our customer contacted us to arrange life insurance to cover funeral expenses and to offer financial security to his wife.
He is a non-smoker and had been diagnosed with Type 2 diabetes (non-insulin dependent) approximately 18 months previously. The condition is well controlled with medication and he has also been prescribed preventative medication for raised blood pressure and cholesterol.
Our client had initially been looking online for appropriate life insurance policies for type 2 diabetics and had found an Over 50's plan which offered £10,000 of cover for a premium of approximately £60.00 a month.
This amount was above his budget and furthermore, although these plans offer guaranteed acceptance, the life cover is not payable in the first 2 years of the term.
We explained that many of the Insurance Providers we have access to are sympathetic to Type 2 Diabetes, particularly if the condition has occurred later in life and is well managed.
A number of the Providers advised that they would require additional medical evidence but were hopeful of offering standard terms.
We provided quotes for Whole of Life and term assurance to age 90, our client applied for Term Assurance to the age of 90 as this was within his budget.
An application was submitted and a report was obtained from his GP. We secured cover for our client on standard terms with an initial sum assured of £10,000 (including the index linked option) over a term to age 90 for a guaranteed premium of £18.04 per month, which provided a saving of approximately £42 per month.
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