Getting Life Insurance When You Have Diabetes
Felix Perez’s diabetes diagnosis didn’t prevent him from buying affordable life insurance. In fact, at one point, he was covered by two policies.
Perez, who lives in Miami, was diagnosed with type 2 diabetes when he was 45. He purchased life insurance on his own five years ago, at age 62, so that he’d be covered even after he retired in 2015 and his employer coverage ended. “I thought [that] if I waited until 67, I’d have a more difficult time or I’d have to pay a higher premium,” he says.
A term life insurance policy often provides the most affordable coverage, though a reasonably priced policy can be difficult to find when you live with a chronic health condition. A term policy provides protection for a specific period of time, typically between 10 and 30 years. If the insured person dies within that time frame, the policy will pay a death benefit to the person’s beneficiary, usually a spouse or family member. Once the term expires, the policy and benefits end. Perez pays $250 a month for his 10-year policy, which will provide a $400,000 payout upon his death. Experts say consumers should buy a policy with the longest term they can afford because the monthly cost will rise considerably if they renew a policy at an older age.
Life insurance policies are based on life expectancy and other risk factors, such as a person’s overall health, medical history, income, lifestyle, and occupation. Those factors determine a risk class, which affects the price. A preferred class, which is charged less for insurance, might include people with no health problems or those who control high blood pressure with medicine. Someone who has a serious health condition, such as diabetes, a family history of disease, or a hazardous occupation, might be put in an insurer’s substandard class due to a higher risk for death. The premiums, or the amount paid for the policy, would be much more costly.
Now the good news: Insurance carriers are increasingly offering affordable options that enable people with diabetes to provide a death benefit for their families. Steven Weisbart, PhD, senior vice president and chief economist with the Insurance Information Institute in Washington, D.C., says many insurers today recognize the medical and technological advances that have helped people with diabetes live well longer. “The longer you’ve been under a doctor’s care, [and] the more you can demonstrate that diabetes is under control or reasonably under control … insurance companies are quite willing to work with you,” he says.
Standard Rates Apply
Licensed insurance broker Sam Goldsmith says a person with type 2 diabetes who’s not on insulin and whose condition is “fairly under control” can expect to pay the same standard rates as someone without diabetes but with another chronic condition.
“People think they’re uninsurable when they have diabetes,” says Goldsmith, who owns GoldsmithInsurance.com in Denver. “The insurance industry is looking at this differently now. They recognize people are not going to die prematurely if they’re compliant with their doctor’s recommendation. This is true for heart disease, a cancer history, or any disease. People will live longer because they’re on the right meds.”
Typically, people with type 2 diabetes who aren’t on insulin and whose A1C levels are consistently under 6.7 percent, are considered well controlled by insurance industry standards, Goldsmith says. But he’s also found standard rates for people with higher readings who show a track record of reasonable control and following doctors’ orders.
For instance, a 57-year-old man with type 2 diabetes and an A1C below 6.7 percent can buy a 20-year term policy for a premium of $155 per month and a benefit of $250,000 upon his death, Goldsmith says. With average blood glucose control (an A1C above 6.7 and below 7.5), the man’s premium would be $232 per month.
Generally, Goldsmith says, women pay lower premiums because they have longer life expectancies and are considered to be less of a risk than men.
But A1C isn’t the only factor that plays a role in your premium. “The industry looks at risk based on factors including how long you’ve been on the same meds,” he says. As the industry sees it, “if you keep changing meds, it means you’re not managing well.” The industry may not be aware, however, that adding medications as needed is a sign of controlling diabetes.
The cost for term life insurance is likely to be much more expensive for people with all types of diabetes who take insulin, Goldsmith says. The industry considers these folks to be higher risk, in part because they’ve often been on medication for longer stretches or for much of their lives.
So, what can you do? Bill Kardos, a licensed insurance and financial advisor for Mutual of Omaha Investor Services in Pittsburgh, offers this advice: Make sure your A1C levels are controlled for at least six months before applying for life insurance to get the best results. “Unfortunately there are some life insurance products out there where, if you’ve been declined previously, it may eliminate you from that product,” he says. Some companies will charge you a higher premium if you’ve been declined elsewhere, he adds. Take advantage of life insurance provided through your employer. You may be able to get a basic amount of coverage, no matter your health status.