Life Insurance for People With Diabetes

Life Insurance Protection for Diabetes and Diabetics


Do you need life insurance?

Not everyone needs life insurance. But if your partner, children or other relatives depend on your income to cover the mortgage or other living expenses, then the answer is probably as it will help provide for your family in the event of your death.

A life insurance policy is the good way to help protect your family financially, should the worst happen. It pays out to a cash sum if you die during the length of the policy. The cash could then used to paying for the mortgage and help sustain the family's lifestyle and everyday living expenses. Use our life insurance calculator to helps with an indictive amount of cover based on your and your family's living requirements.

People should consider getting life insurance to ensure their loved ones are protected. There are certain financial commitments that are essential which emphasise the need for life insurance including:

  • Children (e.g. educational fees, clothing, expenditure etc.)
  • Mortgage(s)
  • Rent
  • Business costs
  • Cost of living

In a nutshell, having life insurance provides financial protection to help your family or business to manage after your death. The peace of mind which life cover brings helps you to formulate clear plans for the future.

There are some instances where you may not need life insurance such as:

  • you’re single
  • your partner earns enough for your family to live on
  • you’re on a low income and could be eligible for state benefits.

However, If you’re not sure get financial advice. You may also want to think about putting aside enough money to pay for funeral expenses.

Learn more about life insurance >>


What is Life Insurance?

Life insurance is designed to protect your family or business against financial loss, if you or your partner were to pass away. The life insurance policy would pay out a tax-free lump sum or regular payments, which will provide some much needed financial security for your dependents in a difficult and uncertain time.

Common Reasons For Having Life Insurance

  • To Pay Final Expenses after death
    This includes the cost of a funeral and burial which can easily run into the tens of thousands of pounds and you don’t want your wife, parents, or children to suffer financially in addition to emotionally.
  • To Cover Children’s Expenses
    You want to be sure that your children are well taken care of and can afford a further education like college or university. For this reason, additional cover is an absolute essential especially when kids are still living at home.
  • Replacing your Spouse’s Income
    If your spouse passed away while the kids were young, you would need to replace their income to maintain the essentials of the family’s lifestyle and cover everyday living expenses. You may also need help with domestic tasks like cleaning the house, laundry, cooking and helping with schoolwork.
  • To Pay Off Debts
    In addition to providing income to cover everyday living expenses, your family would also need insurance to cover debts like the mortgage so they wouldn’t have to sell the house to stay solvent.
  • To Buy a Business Partner’s Shares
    If you are involved in a business partnership, you need insurance on your partner’s life. The reason is so if he or she dies, there will be enough cash to buy his/her interest from his/her heirs and pay their share of the company’s obligations without having to sell the company itself. This would also apply to the business partner and they would also have the same needs (due to the risk that you might die), and so they also need to simultaneously purchase insurance on your life
  • To Pay Off your Estate Taxes
    Paying off an estate’s taxes can be quite expensive, so having insurance in place to pay them is essential to avoid selling other assets or funds that you may have built for your retirement. Using life insurance for this purpose is most common especially if the estate is a large one and uses whole (rather than term) insurance to ensure that cover remains until the end of lif

Types of Life Insurance

There are two main types of life insurance. These are:

    • A whole-of-life policy – will pay out regardless of when you die, as long as you keep up with your premium payments;
    • Term life policies – these policies run for a defined time such as 5, 10, 20 or 25 years. These policies will only payout if you pass away during the term of the policy. If not, there is no payment at the end of the policy term.
        There are 3 Main Types Of Term Insurance:

      • Decreasing Term
        The sum insured reduces by a fixed amount each year, decreasing to nil at the end of the term. These policies are usually used to cover a mortgage or other loan and they pay any outstanding repayment if you die early. Remember, though, at the end of the term nothing is payable.
      • Increasing Term
        The sum insured increases each year by a fixed percentage of the original sum insured. These policies are designed to increase your insurance protection as your earnings increase or against inflation.
      • Family Income Benefit
      • If you die during the term of the policy a regular income is paid to your dependants for the rest of the term. The income can be paid monthly, quarterly or yearly. Some policies provide an income which increases each year at a fixed rate – say by 3% or 5%.

    Advantages of life Cover:

    • Life insurance provides an immediate injection of cash for dealing with the financial consequences of the insured person’s death.
    • Many life insurance policies are flexible and can be tailored for your needs. For example, the death benefit may be decreased at any time to reduce premiums, some may allow premiums to be skipped and death benefits increased.
    • Unlike any other financial products life insurance enjoys favourable tax treatment as any death benefits are generally income-tax-free for the beneficiaries.
    • Death benefits may also be tax free for the estate if the property is jointly owned. Cash values also grow tax free during the insured’s lifetime.
    • Some life insurance policies may be exchanged for another life insurance policy (or for an annuity) without incurring taxation.

    Disadvantages of life Cover include:

    • Additional monthly expenditure to pay for the policy premiums.
    • Life insurance is typically purchased for the benefit of others and usually only indirectly for the insured person.
    • Cash surrender values are usually less than the premiums paid in the first several years of the policy and a policyholder may not recover the premiums paid if the policy is surrendered.
    • Purchasing life insurance and how to position it can be complex especially if the insurance is for estate planning, business situations or complex family situations.
    • The life insurance acquisition process can be daunting (e.g. finding which life insurance company or policy is appropriate for you. What if you have pre-existing medical conditions? etc.)

    Please Note: Although the above tax-related statements are generally true; Sometimes the tax benefits of life insurance have certain limitations under the different set of circumstances which can cause the tax benefits mentioned to be lost. Please discuss your life insurance requirements with a tax adviser as tax rules do change.

    Life Insurance Optional Extras

    Most life policies have optional extras such as:

    • Waiver of premium
      If you cannot follow your normal occupation because of illness or injury, the insurance company will pay your premiums to maintain the benefits under the policy.
    • Disability Benefit
      The sum insured is payable if you become permanently disabled. There is no further payment on your subsequent death.
    • Critical Illness Cover
      The sum insured is paid out if you are diagnosed as having contracted one of a specified range of critical illnesses.
    • Increase Option
      The sum insured increases annually in line with inflation or by a fixed percentage.
      Life Insurance And Taxation

    Provided your policy is a “qualifying policy” the benefits paid are not subject to income tax. To qualify, a policy must satisfy certain statutory conditions.

    These include providing a minimum sum insured payable on your death. Also, premiums have to be payable at annual or shorter intervals for at least 10 years or until your earlier death. If you are a higher rate taxpayer and surrender the policy within the first 10 years, some income tax may be payable.

    Life Insurance On Limited Income

    Young people on perhaps a limited income find that term insurance is the best buy. The term can be chosen to cover the time when children are growing up and expenses are high. Some families find a regular income more useful than a lump sum. For them a family income benefit policy is best.

    Life Insurance With House Purchase

    With life insurance any outstanding mortgage is fully repaid should you die. Under a repayment mortgage your payments are part interest and part repayment of the loan. Decreasing term insurance ensures that if you die before the end of the mortgage term, the outstanding amount is fully repaid.

Applying for life insurance with diabetes

Life insurance companies look at how much of a risk they are taking when providing you, a person with diabetes, life cover, this is then reflected by the premium charged. To help underwriters of life insurance work this out they will analyse information to the following:

  • When your diabetes was first diagnosed
  • The type of diabetes you have (Type 1 or Type 2)
  • Your current HbA1c reading
  • Which diabetes medication you are taking, if any (metformin, insulin or diet controlled)
  • What your body mass index is, as well as your height, weight and waist measurements
  • If you have any diabetes-related complications (retinopathy, nerve damage, nephropathy)

It is likely that the insurance provider will ask you to have a medical and supply information relating to treatment provided by your GP.

Everyone should be able to obtain life insurance, even those with diabetes, regardless of their medical history.

A diabetes diagnosis does not mean that you can't get life insurance cover. However, the severity of your diabetes in addition to your HbA1c levels will have a bearing on the premiums you will pay. In general, the cost of life cover for people with diabetes is more costly (but not sky high) than for those who do not have the condition.

There are specialist providers who deal specifically with life insurance with diabetes cover.

Risk Factors affecting life insurance

Much like standard life insurance policies, diabetic life insurance is also affected by specific risk factors.

Below are some of the reason's insurers give when declining life insurance:

  • Suffer from diabetes complications
  • Body mass index is high
  • You are a smoker
  • High HbA1c levels (for example 85.8 mmol/mol)
  • Have a heart condition or had a heart attack

Other factors that can affect life insurance include:

  • Age
  • Smoker status
  • Health
  • Occupation
  • Sports/Hobbies
  • Family history

It is worth noting that not all life insurance providers will cover people with diabetes. To avoid being declined life insurance it may be worth speaking to a specialist provider to get the cover you need.

How much life insurance cover do I need?

There isn’t one set type of life insurance policy. In fact, there are many different policies that can be suited to your specific circumstances and budget. Whatever you choose, life insurance will still protect your family or business should the worst happen.

Use our life insurance calculator to estimate how much cover you may need regarding your current situation. Simply enter your details in the calculator below and the value of cover required will be automatically displayed.

Getting life Insurance to cover your Business

Another form of life insurance is business protection, which is equally as important as individual or family protection but isn’t as well known. Anyone who is a company owner or director needs to ensure that their business is protected financially.

The general rule for life insurance is the younger and healthier you are, the cheaper the premiums will be. People tend to get life insurance later in life, when they have a reason for it like having children, a mortgage or their own business.

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What happens if you were diagnosed with diabetes after buying life insurance?

If your diabetes diagnosis came after you took out your life insurance policy, it won't affect the cover you took out. The terms and conditions will remain the same irrespective of your health situation changing.

How Often Should I Review My Life Insurance?

When you have life insurance, you should constantly review your policy to ensure that you are receiving the correct cover for you and your circumstances at the time. Some key factors to consider are as follows:

  • Moving house
  • The birth of a child
  • A change in your employment
  • Quitting smoking

A final word

If you have diabetes and are looking for life insurance cover, it is essential that you shop around and compare quotes to get a good deal. What will help you to get a better deal is evidence of how well you manage and control the diabetes.

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