The Diabetes Dilemma

by 11 Jan 2016
With the number of Canadians living with diabetes, undiagnosed diabetes, or prediabetes poised to jump to one in three if current trends continue by 2020, advisors need to become well versed in the nuances of getting coverage for diabetic clients.  

This is especially pertinent when just under half of new cases of diabetes are diagnosed in individuals between 45 to 64 years old; prime target ages for financial planning and insurance sales.  

While there are challenges with insuring diabetics, it’s far from impossible.

As an advisor, the most important thing to keep in mind is time is of the essence. Some studies suggest that a middle-aged person with type 2 diabetes has as much chance of having a heart attack as someone without the disease who has already had one heart attack, while the chance of having a stroke is one and a half times higher. So, the longer someone has had the disease, the greater the likelihood these complications are either present or have started to develop.  The longer the delay the more likely complications will arise and derail chances of getting insurance.

Life insurance offers the best chance to secure coverage for clients who have either type 1 or type 2 diabetes. It might seem counterintuitive given that studies have shown diabetics have mortality rates at least two times higher than those without the disease, but there is more latitude in the underwriter’s life ratings. Simply put the timeline between application and payout of the benefit is much longer than for living benefits products.   

The key to getting clients coverage revolves around proving to the underwriter that the disease is under control and there are no serious complications. Advisors can demonstrate that by showing the applicant has a doctor who they see on a regular basis, the disease is monitored and medication is being taken as prescribed.  It’s critical to provide the name and address of all doctors seen, medication and dosage, any investigative tests that have been taken (such as EKGs, stress tests, or echocardiograms),  the reason for the testing and the results.

In addition to requesting an attending physician’s report, the underwriter may also request a blood profile, urine test and vitals (build and BP check) too. More than 35% of Canadians with diabetes have two or more other serious chronic conditions such as obesity, hypertension or elevated cholesterol. The blood test will demonstrate the degree of blood sugar control and check for cholesterol levels. The urine test is to rule out concurrent kidney disease.

Critical illness insurance, on the other hand, is a little more complicated to get coverage for.

Although diabetes is not a covered condition for adult CI coverage, there are a number of potential CI benefits for which a diabetic person may ultimately make a claim including: heart attack, stroke, kidney failure, major organ transplant and loss of limb or blindness. According to Munich Re’s 2014 Individual Insurance Survey, heart attack, coronary bypass and stroke alone account for 20% of all paid CI claims. However, kidney failure, major organ transplant and loss of limb or blindness are not currently significant contributors to overall CI claim payment.

Because of the strong correlation between the length of time that someone has had the disease and the increased risk of complications, applicants with type 1 diabetes, also known as juvenile diabetes, are generally not candidates for CI coverage.    

Applicants with type 2 diabetes may be insurable for CI coverage at substandard rates  if they  have  not  had the disease for a significant length of time, their condition is controlled and they do not have any complications. This is particularly significant in Canada where we have guaranteed rates for CI.

While this standard might seem harsh, Canada is actually ahead of other jurisdictions in the world where even type 2 diabetics are considered uninsurable risks even though rates in those countries may not be guaranteed.

The key to obtaining coverage is proving the same good control of the disease to the underwriter as noted in life insurance applicants.

Diabetes is a serious chronic disease affecting an increasing number of Canadians many of whom will be looking for insurance as a part of their financial planning portfolio.  Life insurance is an option for most but the risk of early claim for living benefits means that CI coverage may not be an option. This is just another reason why juvenile CI products are so attractive. They lock in the applicant’s insurability at a young age and with conversion options provide lifetime coverage.  

Fact Box

Diabetes

Our bodies’ cells are fueled by absorbing sugar (glucose) from the blood stream.  In order to do this, they need insulin. However, diabetes affects the body’s ability to either use or produce insulin.  As a result, there is an excess of sugar in the blood stream, which can damage blood vessels, the heart, kidneys and eyes.

Type 1

It occurs when the immune system mistakenly attacks and kills the beta cells of the pancreas. No, or very little, insulin is released into the body. As a result, sugar builds up in the blood instead of being used as energy. About five to 10% of people with diabetes have type 1 diabetes. Type 1 diabetes generally develops in childhood or adolescence, but can develop in adulthood. Type 1 diabetes is always treated with insulin. Meal planning also helps with keeping blood sugar at the right levels.*

Type 2

It occurs when the body can’t properly use the insulin that is released (called insulin insensitivity) or does not make enough insulin. As a result, sugar builds up in the blood instead of being used as energy. About 90 per cent of people with diabetes have type 2 diabetes. Type 2 diabetes more often develops in adults, but children can be affected. Depending on the severity of type 2 diabetes, it may be managed through physical activity and meal planning, or may also require medications and/or insulin to control blood sugar more effectively.*

*Definition from the Canadian Diabetes Society.