With both these products, there is also a guaranteed maximum premium, so there is no risk that premiums will become unaffordable if the condition is not managed well.
Although Royal London will underwrite clients with diabetes on its standard product, the insurer’s product specialist, Christina Rigby, says it is important to have a specific product, too.
“Customers with a health condition will often automatically exclude themselves from cover,” she says. “They think it will involve a laborious underwriting process at the end of which they will be declined. We need to show them that cover is available.”
Protecting income
Finding affordable income protection for a client with diabetes is more difficult. Given that many of the complications associated with the condition, such as kidney disease, strokes and eye problems, can affect their ability to work, many insurers see the risk as just too high.
Where an insurer is prepared to offer cover to people with diabetes, Mr Knowles says the acceptance criteria are often tight, squeezing out all but those who have their condition well under control.
“Insurers will also apply exclusions,” he adds. “This is a common way to approach any medical condition on income protection but, with so many complications associated with diabetes, clients need to be aware exactly what is, and is not, covered.”
On the back of their experience in the life insurance market, some insurers are getting bolder about offering income protection to clients with diabetes. As an example, AIG started underwriting diabetes on its income protection product in 2018.
Rather than slap exclusions on policies, it prefers to load the premium. “We always prefer to rate than exclude,” says Ms Croft. “It is much easier for a policyholder to understand.”
Critical cover
While exclusions and tight acceptance criteria can make sourcing income protection tricky, the additional risks associated with diabetes mean very few insurers are prepared to offer critical illness insurance. Their fears are supported by figures from Diabetes UK, which show the condition causes 680 strokes and 530 heart attacks each week.
Only a handful of insurers, including Aegon, Old Mutual and Zurich, will entertain an application from a client with diabetes, and even then acceptance criteria are very tight. “Premiums will be loaded by 75 to 100 per cent,” says Mr Knowles.
“When you are talking to a client about a critical illness policy that is already five times the cost of life insurance and you have to double the price due to the loading, it becomes a very difficult sell.”
Although the insurers’ approach is understandable given the increased risk, it leaves clients with diabetes without affordable cover for critical illnesses that are not linked to their condition. This includes cancer, which accounts for around two-thirds of all critical illness claims paid.
