If you’ve looked into life insurance at any point, you’ve probably heard that it’s difficult to qualify for it with pre-existing conditions. This can be discouraging for those recently diagnosed with diabetes who still wish to give their loved ones peace of mind. If you pass away, you may feel like your hands are tied, and you can do nothing to help your family, but there is hope!
Thankfully, it is possible to get life insurance despite a diabetes diagnosis in many cases. Depending on your medical history and several other factors, it may be more accessible or more challenging for you to obtain life insurance.
In this article, we’ll cover the frequently asked questions about life insurance for diabetes and help you sort through the options so you can determine your next steps. We’ll briefly touch on your options before we look into each in more detail. We’ll also discuss why your type of diabetes is essential and any other conditions that may or may not come from your diabetes. Finally, we’ll give a broad overview of cost. Read on to learn more.
Life Insurance for Diabetics: What Are My Options?
Several options are available depending on the coverage you’re looking for. Here’s a quick summary of some of them:
- Term life insurance. As the name suggests, this type of insurance is short-term, providing anywhere from 10-30 years of coverage.
- Permanent life insurance. This type of life insurance doesn’t expire and includes whole and universal life insurance.
- Guaranteed issue life insurance. This specific type of whole-life or term insurance policy could prove especially useful for diabetics.
- Final expense insurance. Also called “burial insurance,” this life insurance is easier to obtain and comes with higher premiums. It covers outstanding loans and funeral costs.
The type of insurance you choose will depend on several factors, including:
- What do you qualify for
- Other pre-existing medical conditions
- Whether you want short or long-term insurance
- Your budget
While we won’t specifically compare life insurance companies here, you should come away with a better understanding of what types of life insurance there are.
Does the Cost of Life Insurance Go Up if I’m Diagnosed with Diabetes?
If you haven’t already obtained life insurance coverage before your diabetes diagnosis, chances are you’ll have higher premiums than a person your age without diabetes. Although you can’t hop into a time machine to get life insurance before your diagnosis, there are some things you can do to potentially lower the cost, depending on the severity of your diabetes.
Here are some of the ways you can lower the cost of your life insurance:
- Wait for gestational diabetes to resolve. Since gestational diabetes is short-term (and tends to go away once the baby is born), it’s best to wait it out before seeking life insurance if you want a better quote.
- Manage your Type 2 Diabetes symptoms. If you have Type 2 Diabetes, sticking to a proper diet and incorporating exercise into your routine can do wonders to manage your symptoms. Once they’re under control, you have better chances of passing the medical exam and qualifying for life insurance.
- Consider clinical trials for Type 1 diabetes. Currently, Diabetes Research Institute experts are conducting trials on a potentialbiological cure for Type 1 Diabetes. They’re working to help the body produce its insulin through islet transplantation, but these trials are currently only available to people with severe Type 1 Diabetes. Even if insurance is still costly for you, there’s a chance that you could lower your overall costs by saving money on insulin.
- Think about term life insurance. Of all the life insurance options, term life insurance is the least expensive. It might be a good fit if you don’t require any additional features of permanent life insurance.
- Manage other health conditions. Although some health conditions are tougher to manage, doing what you can to remain healthy usually results in a lower premium.
Term Life Insurance Options for Diabetes
Because coverage is offered for a specific period of time, term life insurance rates tend to be less expensive than permanent life insurance. As expected, there are particular benefits and drawbacks to term life insurance for diabetics.
In addition to cost, some of the benefits of term life insurance include the ability to choose the length of your term. A good rule of thumb is to make it long enough for your youngest child to become an adult and fund their college education. That said, investing in a long-term policy over a short-term one is wise since it’s easier to obtain life insurance at a younger age.
Both term life insurance and permanent life insurance come with tax benefits. As long as the policy is active, the policyholder isn’t required to pay taxes on earnings.
Those who choose a term life insurance policy that’s convertible enjoy the added benefit of being able to change it to a permanent policy later on without requiring another medical exam. This can be especially useful for those who have diabetes and are unsure whether they’d pass an additional medical exam.
However, you should never withhold information about your health during the application process – this can result in loss of benefits, a higher premium, or reduced coverage!
Now that you know the benefits of term life insurance, here are some drawbacks:
- There’s no cash value. Unlike a permanent life insurance policy, it doesn’t come with a savings account to withdraw against or borrow from. If you cancel, you don’t get money back unless it offers a return of premium (see below for more information).
- It has a lower age cap. If you are older than 50 and want a longer-term option, it may be difficult to find one. Those who are above 60 are generally limited to purchasing a 10-to-20-year term instead of a 30-year term.
- Coverage is temporary. Though it goes without saying, temporary coverage isn’t best for every life situation. If you’re looking to pay for funeral expenses or see your functional needs child cared for even into adulthood, this may not be your option.
Several term life insurance policies are available, including:
- Return of premium. This policy enables you to get back all or a portion of your premium if you live to the end of the term. This comes at a cost, however – premiums are 2-4 times higher than that of a level-term policy.
- Level term. Also known as a “level premium policy,” this one enables you to pay the same premium for the entire term.
- Yearly renewable term. This policy, also called an “annual renewable term,” offers coverage for one year at a time, and gives you the option to renew without an exam for the duration. The catch is that your cost will be higher each consecutive year, meaning you’ll pay more over time.
Can Diabetics Get Permanent Life Insurance?
Depending on the type of diabetes you have, it may be possible to get permanent life insurance. As noted earlier, permanent life insurance usually combines a death benefit with savings to enable you to build cash value and borrow against it if needed.
Usually, there’s a waiting period in which you are not allowed to borrow against savings – up to two years in most cases. If you die before the waiting period is up, your loved ones will receive reduced benefits. Depending on the insurer, your beneficiaries may end up with:
- The premiums paid plus interest
- A portion of the death benefit instead of the full amount
- No payout
If possible, it may be a good idea to purchase term life insurance in addition to permanent insurance in the event that something happens to you before the waiting period has lapsed.
In addition to the benefit of paying no taxes on earnings while the policy is active, policyholders of permanent life insurance can take money out of the policy (up to the total of the premiums) without taxes, since policy loans are usually not considered taxable income.
Unlike term life insurance, there is no expiration to permanent policies as long as policies are being paid and the insurance hasn’t lapsed and you haven’t surrendered the policy.
We’ve gone over some of the benefits of permanent life insurance. Here are the drawbacks:
- The waiting period. We’ve already discussed the risk of death before the waiting period and how it affects beneficiaries.
- Higher premiums. Because permanent life insurance is made to carry you through to end-of-life, premiums are costlier since they take into account the added health risks that come of aging.
- Fees or taxes if you surrender your policy. Although fees and taxes aren’t charged as long as a policy remains active, you may be subject to them if you surrender the policy. Canceling a policy means that your coverage ends, but you can receive the cash value of the policy minus fees.
Whole life insurance offers a guaranteed death benefit that never decreases as long as premiums are paid, making it the most stable option for those who want permanent life insurance. Universal life insurance has no fixed premiums, which means the amount you pay can increase over time. However, it offers more flexibility than whole life insurance does. Ask an expert if you need help deciding whether whole or universal life insurance is right for you.
Is Eligibility Different for People with Type 1 Diabetes vs. Type 2?
Yes. Those with Type 2 diabetes usually have an easier time qualifying for life insurance overall. This is due to a number of factors.
Although not true of everyone, some features of type 2 diabetes make it easier to insure. Type 2 diabetes is generally:
- Easier to control
- Diagnosed later in life (thus the duration of the disease is lower)
- Less likely to require insulin
- Less risky
- More common
- Able to be managed through diet, sleep, lowered stress levels, and exercise
Those with Type 2 diabetes theoretically can – and have – changed their habits to the point where they no longer test as diabetic. Avoiding excess carbs and steering clear of sugar are great ways to do that.
However,Type 1 diabetes is more dangerous. Again, there are several factors at play, but type 1 diabetes is generally:
- Diagnosed early on in life
- Is much more difficult to control
- Always requires insulin
- Has no cure (though clinical trials are under way to develop one)
- Is an autoimmune disorder
- Is rarer
- Has a higher mortality rate
Because Type 1 diabetes is dangerous and harder to control, it’s far more difficult for those with Type 1 diabetes to obtain insurance. It’s also more costly, compared to rates for those with Type 2 diabetes.
That said, the severity of you diabetes has an impact as well. If you’ve experienced the following diabetes-related symptoms, it will likely be more difficult or cost more to get insurance:
- Heart disease
- Vision loss
- Neuropathy
- Dialysis
- Impaired kidney function
- Uncontrolled blood sugar levels
Other Health Factors That Can Effect Eligibility
Of course, diabetes-related conditions are not the only health factor that can affect your eligibility for life insurance. Here are some other health factors your insurer will consider:
- Age of diabetes onset
- Current medications
- Height and weight
- Tobacco use
What is Guaranteed Issue Life Insurance?
Guaranteed issue life insurance is available for term life insurance… It doesn’t require a medical exam but comes with much higher premiums since the insurance company assumes that you are a person with extensive health issues.
Some guaranteed life insurance policies don’t pay a full death benefit for the first few years of coverage. This makes it a sort of last-ditch effort for those who have difficulty managing their symptoms but still want life insurance coverage. For those who are managing symptoms well, an underwritten term life insurance policy could be a better option.
Have Questions? Seek Guidance From a Professional
If you have any questions about the options brought up in this article, remember to seek guidance from your attorney, CPA, or financial advisor.
While we strive to provide up-to-date, factual information, there is no substitute for an expert who can provide you with personalized insight and advice about your options. They’re also a huge help if you need assistance with applying for life insurance.
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