Thursday, October 28, 2010
Oliver Pereira

Diabetes is a complicated disease and a serious lifelong condition and is a leading cause of blindness, heart disease and kidney disease. Providing fair and reasonable underwriting terms for people with diabetes can be tricky at the best of times and because of this, it can affect your chances to get life insurance.

Type 2 diabetes is by far the most common form of diabetes In New Zealand about 270,000 people have Type 2 diabetes and about one third of cases of Type 2 diabetes are undiagnosed. The numbers of people developing Type 2 diabetes is rapidly increasing. In some groups of people up to 12% of them will have Type 2 diabetes once they are aged over 40 years.

Type 2 diabetes most often occurs in adulthood usually after the ages of 30 – 40 years. In Type 2 diabetes, either the body doesn’t produce enough insulin, or the cells in the body don’t recognise the insulin that is present. The end result is the same: high levels of glucose in your blood.

Of all the people with diabetes about 10% of them have Type 1 diabetes. In New Zealand about 15,000 people have Type 1 diabetes. Type 1 diabetes most often occurs in childhood, often in children aged 7 – 12 years. However it can occur at any age – from tiny babies to very old people. Most people with Type 1 are producing none of their own insulin.

Because life insurance polices are allowed to charge your premium based upon your health status, getting a good policy can be extremely pricey or not even an option. Having diabetes puts you in an impaired risk category that will often make insurance companies asses this risk very seriously before offering you a policy.

Despite all this, though, there is hope in finding an affordable life insurance policy for yourself or for a loved one. There are many things you can do to make yourself more attractive to the insurance companies. One thing you can do is present yourself as a good risk. As diabetes is often a self-managed disease, you can make sure that you have good habits. This combined with a good blood glucose control and a healthy lifestyle can make you a more attractive candidate to insurers. Similarly, you will want to find an Insurance company that does what is called “clinical underwriting.” While the insurance companies usually ask for medical information from the client’s doctor, any additional lifestyle information always helps in the underwriting process. In this process, as they access the risk of selling you a policy, they will consider your overall health and habits.

As with any insurance search, it pays to be persistent; don’t take no for an answer and if one Insurance company turns you down, simply approach another one! Take referrals from friends and family and do your best not to be discouraged. Persistence and determination will pay off and remember that even with diabetes, you will be able to find good life insurance. Insurance companies with experience in impaired risk situations will be more likely to help you than ones without; keep in mind that there are many, many people in your particular situation and that affordable life insurance policy are quite possible.

One thing to remember is that the help of a good insurance agent in invaluable in your search for insurance. A good agent will be able to bring your case to the attention of the policy providers who will most likely be able to help you out and can greatly expedite the process. A good agent will also be able to get your case out to a number of places at once; life insurance is something that should not be delayed, and a refusal can take up a few weeks to process.

Even if you or someone in your family has issues with diabetes, this does not mean that life insurance will be impossibility for you. Having Life Insurance is not a luxury and provides security to your family and lifestyle.

. Marriage: if you’re in your twenties you might think you’re too young to worry about insuring your life, but the younger and healthier you are, the cheaper your policy is likely to be. Once you are married and have joint financial responsibilities, you should consider taking out cover to protect your spouse and any children

. Your first home: when you buy your first home with your partner, you should consider taking out a life insurance policy that will cover the cost of the mortgage so your partner is able to continue living in the house. Which? recommends a joint policy which will pay out when the first person dies

. Children: when you have children, Which? recommends taking out individual policies rather than a joint policy. Each of you will need different levels of cover based on your age, fitness and salary, so taking out separate policies can help you get the cheapest deal. By choosing individual policies you also help to ensure your children will be covered; with a joint policy, the surviving partner would be left without cover when the first partner dies

. Health: honesty is always the best policy when it comes to declaring your medical conditions when applying for an insurance policy. If you don’t disclose an illness, you could invalidate your cover. With all life insurance policies, you can bundle the product with critical illness cover. This policy pays out if you are diagnosed with a specific condition, or are permanently disabled.

. In trust: life insurance companies usually offer the option of writing your policy “in trust” at no extra cost. This enables the proceeds of your policy to be paid quickly, without waiting for probate, and could also decrease the chances of inheritance tax liability because the payout is likely to be excluded from your estate

Common Provisions

Some of the more common provisions in insurance policies include but are not limited to; a grace period, entire contract clause, incontestable clause, misstatement of age clause, war clause, suicide clause, double indemnity clause, policy change clause, and a payer benefit clause.

The grace period clause is a period of time when changes can be made. This can apply to anything within the insurance policy. The war and suicide clause make special provisions for death by suicide or in wartime. The policy change clause usually states the terms in which a insurance policy can be changed and to what degree.
Importance of Provisions

The provisions aren’t there to make your life harder they in fact make it a little easier. While some of the provisions are in there to protect the interest of the insurance company, many of them are there to protect the policy holder. It is important to know what specific provisions are written into your policy. You can always request that changes be made or extra provisions be placed into the policy before you decide to sign on the dotted line. Insurance companies aren’t always forth coming about certain provisions in their policies but many are open to questions.

Know Your Provisions

It is very easy to incur a penalty to your life insurance policy if you do not know what the specific provisions of your policy are. Read through your policy carefully and ask questions about things that you don’t understand or are unsure about. It is better to ask too many questions than not enough, especially when it comes to your financial future.

It’s hard to decide how much life insurance you need. You can’t trust your broker as he’ll always try to sell you the biggest policy he thinks you’ll buy since he’s making commission on it.

Here’s how you can get an idea of how much is enough…

A simple calculation

The calculation you use to work out how much life insurance is quite simple. The rule of thumb is 10 times your annual earnings plus your debt.

So say for example you earn R200 000 per year and you have debt totaling R500 000, you would need R2.5-million in cover.

Where the problem comes in

The problem, or rather complication, usually comes in when the broker tries to sell you a policy that has an investment component to it.

For example, he or she will suggest that you include X amount as a savings portion to your policy. So after 20 years (or when the term of your policy ends) you will get the money back.

Beware of this pitfall

However, beware of this: you should rather keep your investments separate from a life policy as the returns are usually below average.

In addition, let’s say you accumulate R100 000 savings in the policy, and you die, your heirs will only get back the life component while the insurance company will usually keep the investment proceeds.

When making a choice between an independent broker or a company life insurance agent, consumers should consider that a life insurance broker will work with a wide range of companies and can compare policies and quotes for consumers, much faster and more efficiently. If consumers must choose to research companies on their own, they must be sure to obtain several quotes for comparison.

They ought to be sure to consider the long-term financial requirements that would need to be met in the case of death. This would mean the replacement of income until the death of a spouse and, or until children are no longer dependent.

When dealing with independent agents and brokers, remember that all states have licensing requirements for these professionals and consumers should be able to verify the existence of such a license in good standing with the state insurance department. Other considerations are the level of experience that might play an important role in the services that an insurance professional provides. Background and education are two important considerations when selecting an agent or broker.

A good resource for finding qualified insurance professionals is the National Association of Insurance and Financial Advisors (NAIFA), which provides a listing of agents. The NAIFA is made up of over 700 state and local associations, which includes 200,000 members.

With a term life insurance policy, the applicant will select the most appropriate period of coverage as well as the amount of coverage. When establishing the amount of a life insurance policy, the goal is to ensure financial independence for those who depend on them now financially. This could mean that the coverage amount represents an aggregate amount of income that would have to be replaced over a given period, or it may be an amount that, if invested, would return a regular income that could sustain a consumer beneficiary.

It is an option to choose their term of the life insurance policy that means that coverage will end on a specific date. The date that the policy terminates may be a time when children become dependent, or when a major debt such as a mortgage is scheduled to be paid off.

Other considerations like a business continuation plan may be a factor for business owners. This is especially true if the business depends greatly on one single individual, or a few select individuals within the firm. If the loss of one of these individuals would cause a great financial hardship for any reason, then a term life insurance policy could be established to support business operations after the loss. Logic would dictate that the term could be set to expire on that person’s retirement date.

Term life insurance quotes are an important financial endeavor. The best life insurance brokers will be informed, educated and will have the ability to formulate a plan for the consumer or firm that will best suit then needs of their dependents in the event of a loss.

There are four types of accidental death insurance; Voluntary, Group Life Supplement, Travel Accident or Business Trip, and Defendants. Voluntary accidental death insurance would be purchased as a single policy. Group Life Supplement would be an additional purchase to supplement an existing policy. Travel Accident or Business Trip insurance is for accidents on trips, whether for business or pleasure. This type of policy would be ideal for someone who travels a lot. A Dependent’s policy could be purchased for any dependent including children and disabled adults.
Whole Life Insurance

Simply a whole life policy covers the whole life of the policy holder. Premiums are typically paid for a certain number of years (ten to twenty) but the insurance remains active for the entire life of the person or until they reach endowment age. The age of endowment is usually 95+ at which point the policy holder can request the cash value of the policy or is can be paid out like an annuity.

Which Is Better

These plans are very different and serve a very different purpose. Businesses will sometimes take out Business Trip Accidental Death on their employees that travel a lot, leaving a portion for the dependents of the policy holder and pocketing the rest. Accidental Death can be added as a supplement to whole life insurance but usually whole life insurance covers unexpected or accident death within the policy itself. However, it does not cover dismemberment like the Accidental Death policies.

If you smoke, fess up, part of the labs ordered test for nicotine. Failing to disclose relevant information is grounds for denial of coverage, or if this is found to contribute to a cause of death, refusal to pay your beneficiaries.

The nurse, who may be male or female depending on your preference, can and will ask a whole bunch of personal stuff about your health, habits, and even driving record.

If you don’t know about any part of your health history, ASK your internist, and avoid any surprises during the underwriting process. A good Insurance agent will have the skill based on your health answers to usually identify the rate class you will qualify for. Your Insurance rate application is determined by the overall picture of your health. This is much the same as an auto insurer who sets your premium based on your total number of tickets.

The bottom line is that the nurse’s visit is generally a pleasant experience and not to be feared.

One key piece of advice is to use the Internet, as the online option is often cheaper than the old-fashioned route. You have the benefit of comparison websites for comparing different policies. It is also worth exploring term insurance, as it is the cheapest form of insurance, with the monthly payments depending on the size and length of your mortgage, as well as your age and vices. If you go with an independent financial adviser instead, then cover is usually more expensive.

Another recommended way of keeping costs down is to shop around and switch your insurer as often as required, as paying the same premiums every year doesn’t make financial sense in a competitive market. Insurance providers want your business.

Also be wary of taking out life insurance at the same time as getting a mortgage. Although life insurance is vital, especially if you have a family, it should be researched separately and the policy should be suitable to you and your family’s particular circumstances.

Another way to keep down your premiums is to stop smoking, if you haven’t already, as the charges for term insurance for those who have given up smoking for a year falls significantly. And, if you have given up since taking out your term insurance, it is definitely worth looking for a better deal.