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By: Steve Crawford

Four years ago when somebody told me they were a diabetic, I referred them to Fidelity Security, Boston Mutual, or Oxford Life. After all, they are the carriers who will take people with a dreaded disease like diabetes. I knew that in the underwriting manual it stated the insurance company could consider somebody with diabetes for a modified contract, however all the applications I had seen come in on people with the disease generally got declined. In 2000, I got diagnosed with the disease myself, and my understanding of what an insurance company looks for when they underwrite people with diabetes increased. This article is written for both people with the disease, and for agents looking to learn a bit more about how to help their diabetic clients obtain income protection. If you read this and get only one thing out of it, understand that obtaining disability insurance for diabetics is not easy. However if the agent and the client are both willing to put the time and effort into it, and are prepared to handle a few rejections, you can come out in the end with a solid contract.

Related Article: DI Underwriting

I don't remember the source, however I think it was WebMD, that reported 1 in 3 children inside the USA will get diabetes during their lifetime. If that doesn't signify an epidemic I don't know what does. This is the first article I have ever written where I placed a picture of myself on the article, I did so on this one because I wanted people to see I don't represent the normal stereotype of a diabetic. I'm not overwieght, and am not over 40, I got diagnosed three years after playing varsity sports in college.

What is the game plan?

The plan at the beginning should be to start at the top, and work your way down the chain. The game plan should not be to apply with several carriers at once, and see who comes back with the best offer. Where the top is should be relative, as not all diabetics should even apply with one of the better carriers on the market, there are clearly many diabetics who should start with a sub-standard disability policy like the one offered by Fidelity Security. A diabetic who has excellent control of the disease, and no other health problems however can start with some of the best disability insurance contracts in the industry. What I believe the levels of coverage a diabetic can expect are as follows:

1. Best - Possibly a "to age 65" or "5 year" benefit period with a Non-Cancellable and Guaranteed Renewable policy. Any policy issued with a rating of 50% or below is an excellent offer from the insurance company. If the insurance company is willing to offer residual disability benefits, you have done well. I would not expect them to offer any further supplemental riders like COLA, AIR, or future increase options. I should say that I have seen very few offers of benefits to age 65 for diabetics with top notch policies.
2. A "5 year" or "2 year" benefit period with a Non-Can policy. Any rating between 50-100% should also be seen as a good offer from the insurance company. One recommendation I would have to people is that if you receive a two year benefit period offer, ask the insurance company for a 30 day elimination period.
3. If you are not able to secure one of the above offers from a top notch insurance company, it is time to try with a company that offers a middle of the road contract. There are carriers who offer individual long term disability insurance policies with definitions that are a bit more restrictive, therefore they are able to take a few more risks when it comes to underwriting. Under this type of policy you will probably not see any own-occupation benefits, and you will most likely have a mental and nervous restriction. At this level, a diabetic with excellent control of the disease should be looking for benefits to age 65. If control is not very good, then obviously the offer will be more limiting.
4. The last option is still a sub-standard disability insurance policy from one of the carriers mentioned above. A sub-standard policy has a total monthly benefit just like any other policy. The definition of total disability is going to be a gainful occupation definition, and benefits in the first three years of the policy life are limited. If you collect a claim in the first year of the policy, you only get 33% of the benefit. If you collect a claim in the second policy year, you only get 66% of the benefits. Once you are into the third policy year, you can collect 100% of the total monthly benefit should you file a claim.

Control, control, control!!! Diabetes is a disease that can be controlled, and if you want one of the best disability insurance policies on the marketplace today, you need to be able to show the insurance company that you have excellent control of the disease. The Hemoglobin A1C blood test gives the insurance company an idea of your average blood glucose levels during the preceeding 3 months. They will perform this test at the time of application, and they will want to see that you have a track record with your physician of having a HA1C below 6.2 for at least a year. If you are able to show a record of having this disease in control, for a long period of time, you are in a great position to receive a solid offer.

Having a Hemoglobin A1C of 5.0, every three months, for 7 years still won't do it alone. The insurance company is going to evaluate all of the risk factors as well. If you are overweight, you add quite a few additional risk factors that when combined with diabetes may make you a substandard-risk. If you have already had diabetic complications, again these are items the insurance company does not want to see. If you smoke, you can forget anything other than a sub-standard policy. If you were diagnosed before age 28, you can also expect to be declined by the top notch carriers simply because there are too many years left for you to work, and too many years left for your health to deteriorate, and if you are older now odds are you have already done significant damage to your body.

Summing it up

As I said at the top of this page, if you take nothing out of this article, keep a realistic expectation going into the application process. Assess your current situation, if your control of the disease is excellent, and there are no other adverse factors against you, go ahead and apply for the best coverage out there with the understanding you will most likely get a shorter benefit period and a rating. If you don't have excellent control, or there are a couple other risk factors, start in the middle. When all else fails, get a contract from one of the sub-standard carriers on the market. Don't expect the first application you make to be the best offer you'll get, but always take the first offer you get. Place that policy in-force, because it may be the only offer you get, and you can always look for better offers. In the end, just make sure you end up with disability insurance coverage to protect your most valuable asset, your ability to bring home an income.