Arranging life insurance/assurance products when you have diabetes can be difficult. It is again important that you declare your diabetes when you apply for any type of life insurance/assurance products.
However, any insurance policies you already hold at the time you are diagnosed will not be affected. In this case, the premiums will not change and you do not need to declare your diabetes.
The Disability Discrimination Act does not prohibit companies from setting higher premiums for life assurance or health-related policies for people with diabetes, as there is proof of higher risk for people with certain conditions, including diabetes.
How it works
On receiving your insurance application form, most insurers will ask you to fill in a 'diabetic questionnaire' if you have diabetes. They may also ask for further information from your diabetes consultant or GP. An underwriter can then calculate if there is an increased risk and will reflect this in the premium or add certain exclusions to the policy. You should allow a minimum of six to eight weeks for a life assurance application to be processed. This time 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 are statistically more likely to develop complications involving the eyes, heart, feet, kidneys and nervous system. This means that premiums will be more expensive for people with diabetes.
Term life assurance
This type of insurance pays a lump sum to your dependants should you die during the term of the policy. Term life assurance is often sold to support a mortgage. It will either be 'level term' (the premium stays the same over the term of the policy or 'reducing term' (the lump sum payable reduces over time) depending on the type of mortgage, ie repayment or interest-only.
Term critical illness insurance
This type of policy pays a single lump sum payment on the diagnosis of certain specified illnesses during the term of the policy. These policies are often expensive for people with diabetes or have exclusions for pre-existing medical conditions. It is very important that you read the policy document carefully and understand exactly what the policy does cover and what it excludes.
Income protection and family income benefit insurance
These insurance policies pay a regular income to you or your family in the event of your inability to work or your death. Income protection insurance is designed to pay you a regular income after a 'deferment period', should you be unable to work because of illness or disability. The income will be paid until you return to work, your death or the expiry of the policy. Family income protection benefit insurance will provide a regular payment for the rest of the policy term in the event of your death. 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.
Payment protection insurance
Payment protection insurance is normally offered to you if you take out a loan, mortgage or credit card. This insurance is designed to help you meet commitments by covering your repayments (usually for no more than one year) if you are unable to work due to illness or redundancy. However, most of these policies exclude pre-existing medical conditions. The difference between this insurance and income protection insurance is that it covers unemployment and redundancy, is for a limited period only and is based on your loan repayments, not your income.
Payment protection policies are often difficult to claim under, especially on medical grounds, for people with diabetes. While they do have their place, they are usually sold as part of the finance package and you may even be unaware you are purchasing the insurance. It is not compulsory to buy the insurance as a condition of the loan. If you want to purchase this type of insurance, you don’t have to buy it through the lender. In any case, read policy wording carefully, particularly the exclusions, and make sure you are fully aware of the cover provided.
Insurance/assurance and mortgages – things to note
Affordability
When you undertake a large financial commitment such as a mortgage, it is sensible to consider some form of protection to cover repayments if you are unable to do so. Some mortgage providers will not be able to quote you for life assurance, while others may charge excessive premiums, so it is best to shop around. The cost of life assurance can be an important factor in working out how much you can afford to borrow. If the life assurance offered is expensive, you may need to review your borrowing and consider a smaller mortgage, thereby reducing the amount of life assurance required.
Moving or remortgaging
If you have life assurance to cover your mortgage and decide to move house or remortgage, do not cancel your life assurance policy. The reason for this is that you may not be able to replace the insurance for your new mortgage on such good terms, ie you may have to pay more. Continue paying the premium (don’t forget it's you who is insured by the policy, not your home) and if you need more insurance cover for your new mortgage you can top up the insurance with an additional policy. Diabetes UK receives many enquiries from people who have been caught out in this way.
Summary
- To avoid unnecessary frustration, ask your mortgage advisor at the outset if their insurance products are available for people living with diabetes.
- Allow yourself plenty of time to investigate options, bearing in mind an application for life assurance can take from 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 for a mortgage.
- If insurance for a large mortgage seems prohibitively expensive, it may be worth reducing the amount to be borrowed and obtaining another quote.