Be aware that all states require insurance agents to be licensed, and that agents who sell variable life insurance products must be registered with their state securities regulator and have additional state licenses. You can check the background of investment professionals, including agents who sell variable life insurance products, through the “FINRA BrokerCheck” feature of the Web site of the Financial Industry Regulatory Authority (FINRA), www.finra.org, or by calling FINRA’s toll-free hotline, (800) 289-9999.
Make sure the agent you choose represents — and, equally important, checks with — multiple carriers on your behalf. An agent specializing in impaired risk typically represents many companies and has the ability to obtain multiple competitive offers.
Life insurance is big business, and carriers want to make wise business decisions. But many would prefer to provide you with coverage than to deny you. So they research medical conditions, including diabetes, so that they understand the risks that you — and they — are facing.
Risk categories
Imagine yourself in a huge pool. That’s what an underwriter — the insurance company employee who evaluates life insurance applications — does. Then he plucks from the pool the risks that are the most attractive for him to take, and puts potential clients into categories. At the top of the list is a Super Preferred category (which might also be called Preferred Best, Preferred Plus, Elite, or something else). The people who fit into this category are generally young and fit and have no medical conditions. People who have diabetes can pretty much forget that one.
After Super Preferred is Preferred, which can be in reach for some people with diabetes. According to Larry Segel, MD, Chief Medical Officer at John Hancock Life Insurance Company, “At John Hancock, it’s possible for well-controlled Type 2 diabetics over age 60 to qualify for Preferred. Our proprietary underwriting manual allows us to make fine distinctions that often work in clients’ favor. For example, generally, if there are no complications or other impairments, the length of time a person has had diabetes does not have an impact on our offer.”
After Preferred is Standard, and many people with diabetes can fit into this class. Standard premium rates run about 10% higher than the preferred classes.
Below Standard comes what are called Table Ratings. People who fit into these categories pay the Standard premium plus an additional percentage of the Standard premium, usually 25% per table. So if you applied for coverage and received an offer of “Table 2,” your premium would be 100% of the standard rate plus 50% additional premium, or 150% of the standard rate.
In determining which category a person fits into, an underwriter attempts to create an image of who that person is. He looks at the person’s overall health, height and weight, family history, occupation, and hobbies. He then compares that image to the images of other people in the same population, with the goal of predicting when that individual is likely to die — and to cash in on his life insurance policy. Granted, it’s a little grim, but it’s a science. And remember, it’s a business.
The key for the person with diabetes lies in convincing the underwriter to place him in the best possible underwriting category. The category, along with the type and amount of the insurance you want, dictates the premium you pay. So your part is to provide whatever information you can that will help to place you in the best possible category.
Improving your category
Believe it or not, what you’re doing right now is one of the most positive things you can do to improve your underwriting category: You are reading DiabetesSelfManagement.com, and to an underwriter, that demonstrates that you have accepted your situation and are making an effort to see what you can do about it. If this is only a small part of your overall diabetes management plan, even better. Let your underwriter know that.
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Sample Cover Letter
