Insurance

Life assurance, critical illness, income replacement and mortgages

Difficulties are also experienced while trying to arrange life protection products. It is again important that you declare your diabetes when you apply for any type of life protection.

However, any insurance policies you hold at the time you are first diagnosed are unaffected. In this case, the premiums remain unaltered and you do not need to declare your diabetes.

The Disability Discrimination Act has not reduced premiums for life assurance or health-related policies as there is proof of higher risk for people with certain conditions, including diabetes.

How it works


On receipt of an application form from a person with diabetes most insurance companies will ask for a ‘diabetic questionnaire’ to be completed. They may also ask for further information from your diabetes consultant or GP. The underwriter can then calculate if there is an increased risk and reflect this in the premium or exclude certain conditions from the policy. You should allow a minimum of six to eight weeks for a life assurance application to be processed.

This time period allows underwriters to do an individual appraisal and collect the relevant information from doctors and consultants.

Although diabetes can be treated this does not remove the condition itself and people with diabetes, when grouped as a whole, are more likely to develop complications involving the eyes, heart, feet, kidneys and the nervous system. This means that premiums will be more expensive for people with diabetes.

Term life assurance

The plan is designed to pay a lump sum should you die within the term of the policy. Term assurance is often sold to support a mortgage and will be either level term or reducing term depending on the type of mortgage, ie repayment or interest only. 

Term critical illness

The plan will make a single lump sum payment on the diagnosis of certain specified illnesses during the term of the plan. These policies are often expensive for people with diabetes or have exclusions for pre-existing medical conditions (medical conditions you had before the policy was taken out). It is very important that you read the policy document carefully and understand exactly what the policy does cover and what it excludes.

Income replacement

The plan is designed to pay you a regular income after a deferment period, should you be unable to work through illness or disability. The income will be paid until either you return to work, your death or the expiry of the policy. Again these policies are often expensive for people with diabetes or have exclusions for pre-existing medical conditions. It is very important you read the policy document carefully and understand exactly what the policy does cover and what it excludes.

A note on mortgages

When you undertake a large financial commitment, such as a mortgage, you need to have some protection for you and your family. Some mortgage providers will not be able to quote you for life assurance, while others may charge excessive premiums, so you will probably need to shop around.

The cost of life cover can be an important factor in determining what level of borrowing an individual’s personal finances can afford. If the life cover offered is expensive you may need to review the whole proposition and perhaps consider taking a smaller mortgage facility, thereby reducing the amount of life cover required.

Summary

• To avoid unnecessary frustration ask your adviser at the outset of any discussions if their products are available for people living with diabetes.
• Allow yourself plenty of time to investigate your options, bearing in mind an application for life assurance can take six to eight weeks to be processed.
• Apply for cover well in advance of when you need it to be in place. This will avoid a lot of last minute frustration and inconvenience, especially if the insurance is needed with a mortgage.
• If insurance on a large borrowing seems prohibitively expensive it may be worth reducing the amount borrowed and getting another quote.