Diabetes and Life Insurance - Crossing the Divide
Diabetes is on track to become the world’s seventh leading cause of death by 2030, according to the World Health Organization. Diabetes already affects several hundred million people and worryingly, younger people are increasingly being diagnosed with type 2 diabetes. The International Diabetes Federation, which hosts World Diabetes Day on November 14, calls it an epidemic.
Diabetes can lead to blindness, kidney failure, coronary artery disease and other deadly and debilitating conditions. Not surprisingly, life insurance underwriters are keen to know if an individual applying for life or health insurance is a pre-diabetic or already a diabetic. With the necessary information, an underwriter can decide whether the risk is acceptable for insurance cover or whether additional premium can be determined that’s commensurate with the extra risk.
However, diabetes often remains undiagnosed for years and applicants may be oblivious to their condition.
A previously undiagnosed diabetic applicant who has to undergo an insurance medical test will be surprised at having to pay a higher premium for insurance cover or at being declined cover altogether. Refusing cover is bad news, not only for the applicant but also the industry, because insurers should endeavor to cover as many people as they can.
The reality is that most diabetics have additional risk factors for cardiovascular diseases that make it difficult to arrive at a “fair” insurance premium. Making the risk assessment needed for living assurance benefits, such as disability cover, or even critical illness insurance that includes diabetes-related conditions such as blindness, kidney failure and heart attack, is even harder. As a result, the insurance cover is often declined.
The growth in the number of people with diabetes, however, requires that insurers start to segment this pool of risks better. India, which has a particularly high prevalence of diabetes and a high rate of undiagnosed diabetes, set a precedent when it saw the launch of a critical illness plan specifically for diabetics in the early 2000s. The unique selling feature is a wellness programme that offers incentives to the compliant insured. Premium reductions are granted if the insured goes for regular medical check-ups and achieves minimum targets in a number of medical tests.
However, most, if not all, previously undiagnosed diabetics don’t want to be treated as “special” and be offered a “special” product at a significantly higher premium rate. They believe they qualify for a standard product.
It means that underwriters are challenged to select those diabetics – whether diagnosed or previously undiagnosed – that qualify for a standard product and a standard premium, or for a reasonable loading.
Ideally, underwriters should find out whether the diabetic is compliant with the treatment recommendations made by his or her doctor. In the absence of such an evidenced confirmation, the underwriter should look at other factors that indicate a healthy lifestyle - build, for example, or blood pressure and cholesterol levels. Obesity is a pre-cursor for diabetes and weight should be maintained within reasonable limits. Nicotine consumption should also be considered - a diabetic continuing to smoke suggests that the discipline needed to avoid or delay further complications may be lacking.
The significant rise in the number of people with diabetes can in part be attributed to earlier detection - and that means quicker intervention. Both result in a lower overall excess mortality rate for diabetics. Indeed, in Canada and the UK in the important age 45-64 group, the excess mortality of diabetics reduced by between one quarter and one-third over a period of 13 years to 2009.1
Gen Re takes such evidence into account to help diabetics access the full range of standard life insurance products at an appropriate risk rate.
1 Lind M et al. (2013). Mortality trends in patients with and without diabetes in Ontario, Canada and the UK from 1996 to 2009: a population-based study. Diabetologia 56(12):2601-8.