Life insurance for children with Type 1 Diabetes

Type 1 diabetes occurs in people of all races and economic levels. As of today, there is no cure and it is NOT preventable.  Therefore, we felt the need to provide families with options when it comes to life insurance for children with type 1 diabetes. In this post, we will go over why it is important to secure life insurance coverage on your little one, things to consider and mainly what options are available.

Diabetes type 1 is less common compared to type 2. People often time refer to it as juvenile diabetes. Even though type 1 diabetes can appear at any age, many cases are diagnosed in children between 4 and 7 years old, and in children between 10 and 14 years old. The exact reason for its cause is not yet known. There is no cure and it requires lifelong treatment with insulin. More information on the condition itself you can find here.

Before we dive into the subject, we want you to know that we are here to help. You can reach out to us by filling out the quote form, give us a call or send us a message. We will take the time to understand your needs, ask questions and provide you with a personalized solution.

So, why is it challenging to find life insurance for children with type 1 diabetes?

There are 2 words that can be used to answer this question: health complications. Even though the condition could be manageable and a kid with type 1 diabetes could have a normal and active life, it could lead to countless health complications. People with type 1 diabetes are more likely to get heart disease, stroke, kidney failure, high blood pressure, blindness and etc. Therefore, life insurance carriers consider type 1 diabetes to pose a higher risk and securing life insurance becomes more challenging.

So, what are your options and what can you do?

We’ve decided to split up the guide into 2 major categories based on your child’s age. We’ve worked with hundreds of individuals and with type 1 diabetes, the current age is a key component in determining the options.

Current age is under 18 years old

Current age is over 18 years old

Why age matters so much:

We would like to take a second and explain why the current age matters so much. Age determines what policy a particular company has available and it can offer. It limits the number of companies. There are many plans steered towards offering coverage for children, however having type 1 diabetes, may make a person uninsurable.

Current age is under 18 years old

Before we take it any further, we wanted to take a second and congratulate you on taking the time to research the options of securing life insurance for children with type 1 diabetes. It is really beneficial to lock in coverage for your child today and transfer it over once he or she is an adult.

Unfortunately, we’ve worked with many adults looking for coverage just to find out that they are uninsurable due to a condition. It would have been nice for them to at least have the option that their parents had set up years ago. Even though, the coverage may have not been enough it is still helpful.

We would go in a little more detail why an adult with type 1 may not qualify for life insurance later into the guide.

If your child is currently under the age of 18 and you are looking to secure life insurance for him or her, you have only 1 available option: to add a child rider. If you want to submit an individual policy for them, they would be considered as having a pre-existing condition and will not be eligible for coverage. 

What is a child rider and how it works

A child rider is an add-on option to a parent’s life insurance application. It allows you to customize your policy based on your needs. With a child rider on their life insurance policy, parents are able to provide coverage for their little ones at a very reasonable rate. This rider is available on almost all types of policies. Different companies have different options and prices for them.

To help you decide if this option is right for you, we’ve listed the pros and cons.

Pros of choosing a child rider to secure coverage with type 1 diabetes

• Convert the policy to individual

We believe this a huge benefit of the rider. The option allows you to convert it into an individual policy when your child becomes an adult with NO underwriting. This simply means that they could have insurance no matter what is their current health. Many carriers would also consider increasing the coverage up to 3 times during conversion

$25,000 rider may become $75,000 in coverage without having to answer a single health question. Your child’s coverage increases as their need changes.

• Low cost 

The cost is calculated based on units of coverage, not the age of the child or the number of children you have covered at the same time. 1 unit equals $1,000. Typically companies would allow up to 20-25 units of coverage or $20,000-$25,000.

Based on the company, the average cost for a child rider is about $60 per year for $10,000 in coverage. This is less than a quarter a day!

• All eligible children covered under the rider 

That is correct, the price of the rider is the same, regardless if you have 1 or 4 children covered under the rider. All you need to do is include the names of eligible children on the application.

A child needs to be between 14 days old before his or her 18th birthday to be added to the policy.

Cons of choosing a child rider to secure coverage with type 1 diabetes

Since we covered the pros of the option of using a rider to secure life insurance for children with type 1 diabetes, we feel it is fair to cover the cons as well. That way, you could get a complete understanding of the option and see if it meets your needs.

• Low coverage amount

There is a cap of the available coverage amount. It depends on the carrier, but typically is around $25,000 in coverage.

Pro tip :

Both parents are able to apply for coverage and add a child rider to each policy, essentially increasing the coverage to $50,000.

• Underwriting done on the parents

The “main policy” would need to be on the parent and the rider would be considered an add on feature. This means that if the parents are not in very good health, he or she may expect to pay a higher rate for insurance or worse, be uninsurable.

• It doesn’t build cash value

Being this is just an add on to a policy, it doesn’t have any additional features as some of the life insurance policies for children do. One of them is the accumulation of cash value. Cash value is money that is growing within the policy. If needed, the owner could borrow against the cash value account and use the money however he or she deems fit.

Side note:

If your policy builds cash value, please consider the consequences of pulling the money out and make sure that the policy will be funded property in the long run. This is particularly true for Universal life policies.

• If the policy cancels, the coverage under the rider cancels as well

This could be a big one. If for some reason the policy on the parent is canceled, this means that the coverage for the child (ren) would cancel as well

Please make sure you have your policy set up on automatic payments or annual mode. This would ensure fewer chances of human error and possibly leaving you and your family without coverage. Another great tip is to name a secondary addressee. In that case, if your policy is about to lapse, you and your secondary addressee would receive a notice in the mail.

Things to consider:

1. The rider needs to be added at the time of the application
2. Many companies do underwriting on the children and may deny the rider.
3. This is why it is crucial to work with an independent agent. We know the carriers, where to turn to and which carrier would approve coverage.

With that, we would conclude our review of your options to secure life insurance for children with type 1 diabetes under the age of 18. If you have any questions or would like a personalised quote, please reach out to us directly.

The current age is over 18 years old

In this part of the guide, we would turn our attention into securing life insurance coverage for adults who have been diagnosed with type 1 diabetes.

Again, due to the vast difference in the options, we’ve decided to split up the guide into 2 separate parts. Here is what we would go over in this segment:

• Available options
• What information companies would need
• Guaranteed issue option

Here we go:

Available options

There are 2 ways to secure a term life insurance policy – with a medical exam and without a medical exam. Each option has its pluses and minuses, but here are some of the highlights:

A term with No exam – it is very possible to secure a life insurance policy with type 1 diabetes bypassing the medical exam. To secure this type of policy, you still need to answer health questions. The company would still review your prescription report, request a copy of your medical records and run other 3rd party verification. Not every company would consider coverage. Unfortunately, with some, type 1 diabetes is a reason for an auto decline.

The option without a medical exam is convenient and it may offer very important living benefits, based on the carrier and your residence state.

Please reach out to us with your specific information and we would be happy to research the market and see if an option without a medical exam is available for you.

A term with a medical exam – this is a very common option to secure a term policy. Typically the steps are as follow:

1. Complete an application and schedule the exam
2. Meet with a nurse. The appointment can take place either in your home, place or work or a lab
3. The carrier would review the results from the exam and request medical records
4. Review the records and come back with a decision

The entire process could take 4-8 weeks. It is solely based on the carrier and how fast would your doctor (s) provide the records.

What information companies would need

Unfortunately, not everyone with type 1 diabetes could qualify for traditional life insurance. There are many factors companies would consider in order to determine eligibility. Below are just some of them:

• Current age – as you know, the current age is a huge rating factor for life insurance. Older we get, more expensive it is to start a policy.
• Age when diagnosed – this is very, very important. Typically, the company would look more favorably to your application, if you were diagnosed later in life.

For example:

We worked with a lady in her 30s. She was diagnosed with diabetes type 1 when she was 8 years old. Here current A1C level was 8.4. The combination of when she was diagnosed and A1C level made her not eligible for traditional life insurance at this time. (We offered a different option and encouraged her to check back some time in future, as her A1C could improve or guideless could change)

• Any health complication – with diabetes type 1 it is not uncommon to develop health complications such as heart disease, stroke, kidney failure, blindness, insulin shock, diabetic coma, neuropathy and etc. Life insurance companies would need to know if you have a history of any health complications. They will ask the question on the application and also verify the information.
• Another thing they would take into consideration is your current glycated hemoglobin or A1C level.

Please look at the image below to determine if your A1C is within healthy limits. The Centers for Disease Control and Prevention has published a detailed guide about A1C, how to measure and to understand the readings.

• Current treatment – how many units of insulin are you currently being prescribed and have the dosage changed in the past years. Typically, companies are looking for control of the condition and stable dosage.

This is what makes securing life insurance with type 1 diabetes so unique. There are many factors that can make a difference in the underwriter’s decision.

Guaranteed Issue Option

There are companies out there that can offer coverage without asking a single health question. This is a guaranteed issue option. Typically, these policies could be higher priced compared to traditional policies and are structured differently. However, for most people, some insurance is better than none.

In conclusion,

There could be options to secure life insurance for children with type 1 diabetes. Reach out to us and we would determine which plans you can qualify and provide you with the most affordable option.

Thank you