What is life insurance?

Life insurance is a lump sum payment to your family and other beneficiaries in the event of your death or upon being diagnosed with a terminal illness. The purpose of life insurance is to provide your family with financial security if you were to experience an accident, serious illness or even death. Taking out life insurance involves four steps:

1. Pre-assessment
2. Underwriting
3. Negotiating
4. Policy acceptance.

What are the different types of life insurance?

There are different types of life insurance which can protect you in different ways by paying out in different situations. Often, you can choose which types of protection you want with a life insurance policy. Choosing more cover will cost more, but can also bring more protection.

• Life insurance. Term life insurance (or death cover) pays out if you die or are diagnosed with a terminal illness. It is the core of a life insurance policy and pays out a large amount of money all at once as a lump sum.
• Total and permanent disability (TPD) insurance. This cover pays out if you become completely and permanently disabled, for example, if you become paralysed. It also pays out a lump sum all at once.
• Trauma insurance. Up to 58 conditions are covered including diabetes and diabetes complications. This cover pays a lump sum if the policy has been taken out prior to being diagnosed with a chronic health condition or injury.
• Income protection insurance. This cover is different because it does not pay a lump sum. Instead, it pays out a smaller amount every month. You can access this benefit if you are unable to work because of injury or illness.

Can I get life insurance if I have been diagnosed with diabetes?

You can get life insurance if you have been diagnosed with either type 1 or type 2 diabetes, provided your diabetes has been well managed for a period of at least 6 – 12 months. However, for those people whose diabetes is well managed, they may or may not be approved for life insurance if they have an additional health condition/s such as:

• Coronary heart disease
• Smoke
• Obesity
• High blood pressure (which is not well managed)

Does life insurance cost more for people living with diabetes?

Yes and/or sometimes. Although diabetes is a serious medical condition, it doesn’t mean those who live with it can’t take out a life insurance policy. The cost of life insurance when you have diabetes tends to be higher compared to those without this health condition, as they are considered a higher risk for insurance companies. The premium you pay depends on how the life insurance company rates you. It will be based on a range of health related and treatment factors.

You can expect to be asked for written reports from your doctor on:

• When you were diagnosed
• Whether you have any additional health risk factors
• Your family history
• Your age
• Your current weight and height
• Your blood pressure readings
• Cholesterol readings
• Kidney/liver function
• Your medical history
• The type of diabetes you have
• Your smoking status
• How often you check your blood glucose levels across a day and night
• Any medication/s you are currently taking
• Your blood glucose level readings over the last few months (trends)
• How often you consult your GP, diabetes specialist, diabetes educator and other health professionals
• Your most recent HbA1c
• Your diabetes management plan

Here are some key considerations

• Get a medical examination before you apply for an insurance policy
• Think about your needs – based on your current family situation, income and any debts you may have
• Shop around and get as many quotes as you need
• Work out how much you can afford
• Be honest and up front when you purchase your policy about your pre-existing medical condition. People with diabetes will be asked to provide more medical reports from health professionals than a person with no health conditions
• Consider buying several term policies to cover different purposes and different lengths of time
• Regularly review your life insurance needs. Your needs change according to your life stage eg. marriage/divorce, starting a family, changing jobs or retirement
• Take the time to compare prices and policies
• Before deciding on an insurance advisor; ask them about their years of experience, education and credentials. Their personality is also important as you will need you feel a sense of trust and respect when dealing with them
• Consider using cover calculators to assist you in working out the level of cover you may need
• Remember that many insurance companies are for profit and not community service organisations
• Be aware that insurance companies can and do refuse to sell life insurance to clients who do not meet their criteria

And remember

• Don’t just accept the cheapest or easiest option …. Be prepared to do some homework and shop around for a company that’s willing to provide you with some options
• Many insurance companies offer quotes on line. Don’t skim over the Product Disclosure Statement (PDS) … read it in full and make sure you fully understand all the costs and risks before you take out an insurance policy
• If you smoke you can typically expect your premium to be around 50 per cent higher than that of a non-smoker. Giving up will help to cut the cost of your life insurance
• Don’t cancel an existing life insurance policy before signing off on a new or alternative one. This could leave you uncovered. Always ensure your new life insurance agreement is active prior to cancelling a previous one
• Don’t hesitate to ask lots of questions or seek clarification on any aspect of the policy before you agree to it

Complaints

If you have a complaint about an insurance policy, a claim, or want to appeal a decision made by an insurance company you will need to make a direct complaint to the insurance company’s complaint handling section (by law each insurance company has this section).

If your matter is not fixed, you can make a complaint by visiting the Commonwealth Ombudsman website http://www.ombudsman.gov.au/ or by phone on 1800 637 700 (the office is open 9am to 5pm Monday to Friday).

Further information

For more information on insurance visit the Chronic Illness Alliance website: www.chronicillness.org.au/workwelfarewills/. This is a plain English guide to legal issues around health and life changes.

For help or more information, contact your relevant state or territory diabetes office or the NDSS Helpline on 1300 136 588 or seek advice from a financial advisor specialising in personal risk protection.

Article reproduced for Circle magazine. Thanks to Julie Davie, Advocacy Officer for Diabetes Victoria