According to the American Diabetes Association, 30.3 million people have been diagnosed with diabetes and the numbers continue to rise as generations age, causing a headache for some financial professionals when it comes to locating proper life insurance coverage for their clients. When working with older clients, it can be difficult to find an affordable policy; however, combining that with less than ideal health issues can often create hurdles difficult to overcome.
Facts About Diabetes and Life Insurance
As Type 1 (insulin dependent) diabetics only makes up 1.25 million of the 30.3 million diagnosed, the options for life insurance to cover the bulk of the Type 2 (non-insulin dependent) diabetics depends largely on the age of diagnosis and how well controlled this issue is. Oddly enough, many of the independent companies offering both term and whole life products in the marketplace favor a later diagnosis age making an individual diagnosed in their 50’s more desirable than someone in their 30’s, as long as it is properly controlled within underwriting limits. Granted, these types of individuals may get rated higher and come with a higher premium because of the rating, they can still be good candidates for life insurance.
While controlled Type 2 is not completely shunned in the underwriter’s eyes, an older Type 1 insulin dependent diabetic who was diagnosed early in life can be a ticking time bomb in the eyes of a risk-adverse underwriting team which leads to even less options than their counterpart. While modern day mortality rates are drastically better for Type 1 diabetics than previous generations, the fact remains that Type 1 diabetics are still a higher risk to absorb for insurance companies.
“Am I Able To Get Life Insurance…?”
What’s an advisor to do with that older client who is diabetic and needs affordable coverage to best solidify their end of life plan? Think outside the box.
The Type 2 diabetic audience has many of the same options for policies as anyone else, just at a higher rate. While a fully underwritten policy may be the standard and at times the most beneficial, the rise of no medical exam term and permanent life insurance policies in the recent years has become a prevalent option to many advisors who work with more specialized and higher risk clients. That being said, only a handful of companies have flexible enough underwriting guidelines and are willing to consider bringing on Type 1 diabetics into these types of policies.
More often than not, older Type 1 diabetics do qualify for some form of graded or level benefit whole life policy, albeit with higher premiums and lower face values on these types of policies. At times a final expense policy may be the only other option as these typically have no medical questions and are guaranteed. The downside to these types of policies is that your client may pay more over the life of the policy than the death benefit, challenging the ethical and fiduciary responsibility you have as an advisor. Honesty and full disclosure is key when it comes to this area.
Sadly, many diabetics regardless of type often put off life insurance coverage because they feel that it will be too expensive or they won’t qualify, which isn’t always the case. There are dozens of insurance companies willing to take them on and provide the life insurance they need, making finding the best option the hardest part of the process. Whether your client is young or old, a diagnosis of diabetes does not stop their need or qualification for the best and most affordable life insurance coverage possible.
Don’t let diabetes be a road block to life insurance. Well controlled, otherwise healthy type 2 diabetics at ages 51 and older can sometimes obtain standard or better rates.
At Highland Capital Brokerage, our underwriting expertise and carrier relationships allow us to advocate and secure favorable offers for diabetics and other special risk clients. Click here to download our Diabetes Questionnaire which can help start the life insurance conversation with your diabetic clients.