……..and could you be paying less??
If you have a significant health condition such as diabetes or heart disease and your application for life insurance is accepted, almost always you can expect to pay higher premiums because of your health condition. Insurance companies charge more to cover the higher risk of the policy resulting in a claim.
But have you ever stopped to consider how the extra amount the insurance company wants you to pay compares with the rest of the market? If you did and you looked into this further you might be very surprised at what you might find.
Consider this example – Sarah and Sue are twin sisters aged 40, both non smokers and each requires £180,000 term life insurance over a 25 year term. The only difference between Sarah and Sue if that Sarah has no significant health conditions, whereas Sue has insulin controlled diabetes with average control.
Sarah is able to purchase the required cover from insurance company A at £15.34pm with insurance company B offering her the same cover at £15.73pm – or about 2.5% more than company A.
But for Sue its a different story. Due to her diabetes Company A’s premium increases to £28.08pm. But company B now want a whopping £48.81pm! – which is now over 73% more than company A, or an extra £6,200 over the whole term of the policy.
So why does the differential go from 2.5% to 73%?
The answer lies in the different underwriting decision that that the company A and company B make after looking at the medical information. Not all companies make the same premium pricing decisions. In fact each UK insurance company generally has well over a dozen different premium ratings bands from which to choose when deciding which one to put you into and the key thing is that they dont all choose the same banding!
The moral of the story is that if you have a significant health condition shopping around is even more important than normal and could save you a small fortune. Even if you have alreay purchased cover in recent year after being diagnosed with your condition it is worth doing some research to see if you can save yourself some money.
Finally if you find thought of doing the necessary daunting (which it certainly can be) why not get a specialist broker to have a look for you.
www.moneysworth.co.uk offer a no fee life insurance shopping service for people with health conditions. Its simple to use and Moneysworth do the research for you. You can also call with your enquiry on 0845 430 5200.
I have just read an article in todays Cover Magazine here http://tinyurl.com/7dlbkwe in which Zurich’s head of underwriting is quoted as stating that huge numbers of applications received contain ’embellishments’ of the truth about applicants’ health details.
Why would anyone wish to take out life insurance using information which if succesfully contended at claim stage by the life company might lead to the claim being disallowed? How pointless is that? In stead of (presumably) saving a bit on the premiums, non disclosure risks wasting every penny of the premiums.
Of course in such cases it won’t be the person who is insured who will ever know. It will just come as an extra horrible shock to those who are left. Messy!
As so many of our clients at Moneysworth have pre existing health conditions (including diabetes, heart conditions and other health conditions), it is common for life insurance companies to write to our client’s doctors for medical information before making a final decision. Though on the face of things this might be seen to cause a degree of anxiety during the waiting period, the reality is that at the end of the process clients can feel extra peace of mind, knowing that the insurance company holds a report from their doctor.
In fact in many cases clients say to us that they would prefer the life company to write to their GP so that they can feel safe knowing that medical information HAS been disclosed!
And of course by using Moneysworth our clients know that we have properly researched the market to find the best solution for them individually. Which is important when you consider that different insurance companies charge widely different prices for people with the same health conditions.
So if you have a health condition and want to apply for life insurance make sure that you fully disclose your health information and if possible use the services of a life assurance broker who really does specialise in helping people with pre existing health conditions. That way you will know that you are fully covered and at a good price.
Whether you have diabetes or whether you are concerned about the possibility of being diagnosed with diabetes in the future you should take a minute to review your life cover. If you need more than its probably a good idea to act sooner rather than later.
Currently Diabetic? – Once you have started your life cover, the terms (including the premium amounts) are generally guaranteed for the rest of the policy providing that continue to pay your premiums, irrespective of future changes in your health. Delaying taking out cover will generally end up costing you more money when you take out cover at a later date because you will be older. It may also cost you more because of the progress of your diabetes, especially if you develop more complications such as retinopathy, neuropathy or kidney issues. So again arranging your cover now protects you from the effects that future changes are likely to have if you delay. Worse still some future health developments could mean that it becomes impossible to be able to obtain life insurance. One highly relevant example of this would be the future development of any heart issues which is a significant additional risk factor for diabetics. Unfortunately no mainstream insurance companies will offer life cover to any diabetic, type 1 or type 2, who also then goes on to develop a condition such as angina or who has a heart attack. However the life insurance policy terms for those diabetics who arranged their life cover before they developed any heart conditions are still guaranteed, which also means that if death accours as a result of a heart attack you are still covered.
Not Currently Diabetic But Worried About Being Diagnosed With Diabetes In The Future?
You would also be well advised to review your life cover now rather than later. Now you may still be able to obatin life cover at lower premium rates and in the absence of any significant existing health factors there is a good chance that you may be able to so at ‘normal’ premium rates, which are the cheapest premium rates. Again if you take out the cover now these premium rates are generally guaranateed. If you delay sorting out your cover until you are diagnosed with diabetes, expect to pay higher premiums and in some cases much higher premium rates. Also if you delay until you are diagnosed you should expect to experience difficulty in being able to arrange some other valuable benefits, for example critical illness cover. This could mean for example if the purpose of the life insurance is pay off a mortgage that the option to include insurance to pay off the mortgage if you have a heart attack is simply no longer available to you even though the risk of it happening has increased.
For a long time the provision of critical illness cover in the UK for diabetics has been extremely limited. Where critical illness cover has been available it has come with significant exclusions for cardio vascular risks, the very critical illnesses that would be of most interest to those with diabetes.
The good news is that significant changes are taking place which mean that for some diabetics we are now able to arrange critical illness cover without any exclusions. As specialists in the proctection market for people with health conditions welcome this excellent new development which we believe will be of real benefit to many diabetics. Diabetics wishing to make enquiries should visit http://www.moneysworth.co.uk/ or call 0845 430 5200
‘There’s nothing worse than an ex-smoker’ it’s said so I’ll start by fessing up to a previous habit. My purpose is not to moralise on the subject (we all make our own choices anyway), I simply want to look at how insurance companies currently view smoking and diabetes. Also just before I get going I should point out that we at Moneysworth help both smoking and non smoking diabetics to obtain life cover, day in day out.
It may seem a bit obvious but we and the life companies all know, as it says on our the packets, that smoking is bad for our health. As mentioned in previous blogs not only do life companies charge significantly higher premiums for smoking, the price differential has been increasing over the years too.
So what about diabetes and smoking? Well did you know that some life companies not only charge extra for both being diabetic and for smoking but also make a further third charge for smoking AND having diabetes? We also know of one major insurance company who automatically decline all type 1 diabetic smokers, regardless of how good the rest of their profile.
So why the nervousness? It’s all to do with cardio vascular risks. Diabetics are at increased risk of cardio vascular events and of course unfortunately diabetes is a progessive illness. Doctors are therefore keen to identify and manage key cardio vascular risk factors in their diabetic patients. Key factors include BMI and a family history of early diagnosis of heart conditions. Many diabetics take statins and in a significant amount of cases this is not due to the patient having a cholesterol problem, but to make sure that they don’t develop one in the future, as this would again provide an additional cardio vascular risk. Blood pressure is another key factor.
Perhaps to some readers the risk of cardio vascular complications for the diabetic does not seem too important or immediate. I would urge such readers to think again. Firstly and most obviously a lot of people do die of heart attacks – and for these the warning signs often come too late ornot at all. Secondly for those diabetics who do manage to survive a heart attack or who are diagnosed with angina for example, the chances of obtaining new life cover currently reduce to nil with all the major UK life companies. I will return to this issue in a later blog.
In the meantime what can smoking diabetics expect when applying for life cover? The truth is that many of them can expect to be declined by a lot of companies. You will save yourself a lot of time and heartache if you use the services of a broker who really specialises in health conditions.
The significance of smoking for Type 2 sufferers who apply for life cover will depend upon the number and seriousness of other additional (especially cardio vascular) risk factors present as well as the level of smoking. At the very least the premiums will be significantly more expensive and at worst the applicant might struggle to get any life cover at all.
For Type 1 sufferers smoking is even worse and applications are even more likely to end in declinature. The reason why is as follows. Type 1 sufferers tend to have already been living with diabetes for a lot longer than the average Type 2 sufferer who is seeking life cover. This means that they generally start at higher rating bands to begin with. This also means that there is less room for the insurance companies to play with in terms of adding extra amounts of ratings for extra complications, before the cases turn into a ‘decline’. It is still possible for some type 1 diabetic smokers to obtain life cover but its more difficult than for type 2 diabetics.
The news for diabetics who are able to give up smoking for at least 12 months is generally more positive as they can still be treated as non smokers by the life companies. Stopping smoking is likely to result in a more favourable attidue from life companies and cheaper premiums.
So in summary our advice for smoking diabetics is
1) Do seriously consider giving up smoking if at all possible, most importantly it will improve your health in the long term and save you a lot of money.
2) When you give up smoking for 12 months do expect life assurance companies to seek to verify this by way of a cotinine test.
3) Don’t however delay purchasing life cover in the meantime. Waiting until you have stopped smoking for 12 months before applying for life cover may leave your family with little or no protection and the prospect of losing the family home. Its better to find cover now and protect your family even if you apply for a lesser am,ount of cover than you would ideally like. Most people will still stand a good chance of benefitting from reduced premiums when you have stopped smoking for 12 months anyway.
4) Use a specialist broker rather than trying to arrnage the life cover yourself – its quicker and you are likely to get a better result. But make sure the broker really is specialist in arranging life cover for diabetics first.
5) If you think it is unlikely that you will choose to stop smoking in the foreseeable future, then work on the basis that it will become more difficult and more expensive to obtain life cover in the future. Get covered now and keep hold of it!
We recently had an interesting case concerning diabetes and critical illness cover where we acheived an unusual outcome (more of which below). But its worth looking first at the general current landscape for critical illness cover and diabetes in the UK protection market. Is diabetes a critical illness for insurance purposes? Can you get critical illness cover if you already have diabetes?
Diabetes is a progressive and life changing illness that can lead to some potentially very serious outcomes. So does diabetes count as a critical illness? Does it appear on the list of critical illnesses generally covered on most insurance company critical illness plans? The answer is mostly no. One exception to this is late onset type 1 diabetes which is included as a critical illness condition by at least one major insurer. Late onset type 1 is relatively unusual so the chances of making a claim for this are very small. But it can and does happen. We know a lady who fell ill on holiday last year and was found to havean Hba1c reading of 27 – in her late forties she was diagnosed type 1 immediately and also then had to face her life long phobia of needles.
But for the vast majority of critical illness policy holders, the diagnosis of diabetes Type 1 or Type 2 will not provide them with a valid condition on which directly to make a claim.
But the story doesn’t end there. As 2.4 million UK diagnosed diabetics know one of the key issues for them is their increased risk of cardiovascular complications. Indeed this is why many diabetics are put onto ‘preventative’ medications for blood pressure and/or cholesterol in order to try and prevent the development of additional cardiovascular risks.
So here is some good news. Even though the diagnosis of diabetes will not in most cases prove to be a valid health condition on which to make a claim under a critical illness plan (despite the seriousness of the condition) policy holders are more likely to be able make a claim if they go on to a heart attack or stroke, as these are more generally valid critical illness claim conditions.
So much for people who don’t have diabetes now, what about those who do? Is it possible for diabetics to obtain critical illness cover?
The answer to this question is genarally negative. Nearly all the mainstream insurers currently will decline applications for critical illness cover from diabetics, irrespective of type, duration or the level of control levels.
But…… there is one company currently who will consider offering critical illness cover to some diabetics. If you are 40 or over and have good control with no complications, you might be able to obtain terms. For those who are able to get cover there will be exclusions on the policy in the main for any cardiovascular conditions. Given the increased risk of suffering cardio vascular conditions some diabetics may consider that the cover excludes the very health risks they wish to cover. Its difficult to argue with that, although it is worth mentioning that a discount in premiums is generally applied to reflect the excluded cover so that diabetics will pass less than non diabetics for once! Also the remaining cover still covers a lot of conditions including cancer, which is a huge area for actual claims.
Finally just to go back to the story of the recent client for whom we acheived an unusual result. The client was seeking critical ilness cover. On paper he had been diagnosed with diabetes and received medication for diabetes. However in his case the doctors felt that the diabetes had been caused as a side effect of strong medication for another health condition which had effectly caused his pancreas to stop making insulin. Furthermore the effect was temporary and the client had to be taken off treatment when his Hba1c readings dramatically dropped and if was found that his pancreas had resumed production of insulin. Since then the clients blood readings have stayed within ‘normal’ levels and he has not needed any medication.
Whether or not anyone who has been diagnosed with diabetes can ever be described as an ‘ex’ diabetic is a hot topic of debate and one for which there are others far better than I to comment upon. However what is for sure is that for insurance companies generally, its ‘once a diabetic always a diabetic’. Which was exactly the line taken by all the insurance companies when we contacted them. Probably it didn’t help when we told them that this client especially was looking to be treated as a non diabetic so that he could have cardio vascular conditions included in his critical illness cover. The door was firmly shut.
With one exception! We did find one company who were willing to take on board the unusual aspects of this case and who were willing to offer our client the cover he sought. So he is now covered for, among other critical illness conditions, heart attack and stroke – two of the three main critical illness claim areas for critical illness claims for.
NOTE: For more up to date information on this topic read the more recent blog dated 24th August 2011