Life Insurance for Diabetics

How Insurance Companies Rate Risk


Insurance companies evaluate your risk of dying during the term of the insurance contract through medical and non-medical underwriting analysis. Of course, they can’t tell exactly when you are going to die, but given their extensive historical databases and knowledge of medical conditions, they will place you into a category based on the level of risk that you pose to them.

After reviewing your application, medical exam and health records, the insurance company underwriters will assign you a rating which determines the monthly premium you will pay. These rank from the best “Preferred Plus” through “Non-Smoker,” “Standard,” and then the various “impaired risk” or “substandard” classes. Some applications are declined or deemed “Risk Not Acceptable.” The insurance company will look into criminal records, motor vehicle records, and sometimes credit and financial records when conducting their review.

Insurance companies are in business to sell life insurance, and will in many cases offer you a policy even if you have a checkered medical history. In my years of experience as a life insurance, more often than not, I have been able to place these types of cases with one or more carriers. In general, insurance companies will place diabetes into an “impaired” risk category, which means your rates will be much higher than standard policies. It is very difficult to get coverage for an insulin-dependent diabetic or person with juvenile diabetes.

When assessing the life insurance application of a person with diabetes, the underwriters are looking for stability in the individual's treatment. If you are having difficulty maintaining stable glucose levels or if you do not get regular checkups, the insurance company will be concerned. Furthermore, if you are also overweight, have vision problems, smoke or have high blood pressure, these "co-morbid" factors will throw up red flags.

Developing Type 2 diabetes before your 50’s is scrutinized more than diabetes that developed later in life. HbA1c levels found in the A1C test are among the most important metrics that the underwriters look at. HbA1c levels of 7 or less (with no complications) are the most desirable. HbA1c levels above 9 (including some complications) will raise your monthly rate.

Insurance companies work together through a process called “facultative reinsurance” to spread the risk of impaired or very large cases. This works to the advantage of the person requesting coverage since an otherwise “uninsurable” case may get a second look.

