Is Whole life insurance for diabetics a better choice than term insurance? Whole life is permanent insurance which you cannot outlive. Term is temporary. If you have diabetes, what do you do when the term runs out?
Diabetes is a disease which many people will struggle with for their entire lives. I know, I have diabetes. I eat well, exercise and I am not overweight. But Diabetes is in my family history and will always be lurking in my body for the rest of my life.
There is essentially no cure for diabetes. Yes, it can be controlled through diet, exercise and medication but for most people, it could resurface at any time. So, the question is, why would you purchase a temporary insurance product such as term insurance when you know your insurance needs could be for the long term?
Many financial celebrities and investment publications say whole life is a terrible investment. They claim whole life should be avoided at all costs and Term insurance is the best choice for anyone looking for life insurance coverage.
But is whole life the terrible investment choice that some people make it out to be? Let’s take a look:
Term or Whole Life Insurance For Diabetics – Which is Better?
Term life insurance for diabetics is temporary coverage which eventually ends. It is essentially a wager against the insurance company that you will die within the term and the insurance company is betting you won’t. If you take out a 20-year term policy and you die one day after 20 years, your family receives nothing.
Whole life insurance has the potential to cover you for your entire life. You cannot outlive the policy as long as you pay your premiums.
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When you pass away your family will receive the full death benefit. Plus, there is a “back out” clause – a cash value account – which, if you decide you don’t need or want the coverage anymore, you will receive a portion of your money back.
Term Life Insurance Case Study
A 50-year-old woman with a well-controlled history of diabetes, applies for $250,000 of term life insurance. Since her A1C levels are below 8.0, with no other health issues, she will probably receive a standard rate offer from the insurance company.
The annual premium will be $672.00. Over 20 years, she will pay a total of $13,440 for her policy. When she is 70, her coverage is over. She has basically donated $13,000+ to the insurance company. If she still requires life insurance over 70, she will have to re-apply. If she has developed any additional health issues over the past 20 years, she could be denied coverage or pay extremely high rates.
Term Life Recap
- Inexpensive cost
- Temporary coverage
- Coverage ends when term is over
- Need to re-apply if insurance is still needed
- If approved, rates could be unaffordable
- Possible decline
Whole Life Insurance Case Study
The same 50-year-old woman decides to take out a whole life policy instead. The cost is 5 times more expensive than term insurance – $273.61 per month or $3,283.32 annually. However, a portion of her premium is set aside in a cash value account earning a competitive interest rate of 3%. (See chart below).
When she is 70, her insurance policy is still in force. There is no need to re-apply for new coverage. She has accumulated $60,856.00 in her cash value account (hypothetical based on non-guaranteed interest rates) and she has options.
Her total premium cost over 20 years was $65,666.40. The total net cost for her whole life policy is only $4,810.40 (payment of $65,666.40 – cash value: 60,856.00 = $4,810.40 net cost)
If she does not need the coverage, she can cancel the policy and receive a lump sum of over $60,000. Or she could borrow up to 90% of the cash value – tax free – and take a trip to an exotic island, buy a car, pay off her mortgage or do anything with the money she pleases.
Whole Life Recap
- Initially 5 times more expensive than term insurance
- Coverage lasts for lifetime
- Cash value accumulation
- Option to keep the policy or cancel
- Total cost over 20 years is less than term policy
- Tax free withdrawals
- Lump sum cash refund of almost all premiums paid
- Options, options, options
Another permanent insurance alternative would be Guaranteed Universal Life to age 121 which works the same as whole life but is less expensive ($2,700.00 annually) and accumulates less cash value. We will discuss this option in a future article.
Whole Life Insurance for Diabetics – With a Medical Exam
To get the best life insurance rates available – either term or whole life, you will need to submit to a medical exam. The life insurance company will request your medical records from your physician and review your health history. (If you want to skip the medical exam, you can go to the next section of this article) As insurance agents, it’s our responsibility to find the most competitive life insurance policy on your behalf. To successfully do this, we’ll need to know the answers to the following questions:
- Do you have type 1 or type 2 diabetes?
- Do you have a family history of diabetes?
- What age were you diagnosed with diabetes?
- What are your current and past Hemoglobin A1C levels?
- Are you taking medications to control the disease?
- Do you have any diabetic complications?
- Any other health issues?
With this information, we can shop the market and find the lowest rate available for YOUR unique diabetes situation. You have to understand that each life insurance company will look at your diabetes factors differently and it’s up to us to find the business that will give you the best rates. The best life insurance rates will be given to those with well-controlled diabetes who were diagnosed later in life.
Whole Life Insurance for Diabetics – Without a Medical Exam
Whole life or term insurance with no medical exam is going to be more expensive than a policy that is fully underwritten. If your diabetes is not well controlled or you have other health issues, you might not qualify for a traditional policy. So, a no exam policy could be your best option.
Fortunately, there are several different options and companies to choose from. The following are just a few of the best no exam whole life insurance companies for diabetics.
No Exam Whole Life Insurance Companies For Diabetics
American National (ANICO)
ANICO is a leader in the no medical exam marketplace. They offer whole life without an exam from ages 50 to age 80 up and maximum coverage of $50,000. However, even though there is no exam, they will still require your medical history records.
They offer an e-signature application so there is no paperwork to fill out. The entire approval process could take up to 4 weeks.
Ameritas offers a “Jet Issue whole life” program with no medical exam. Coverage amounts available are $100,000 to $200,000. They do require a simplified application with medical questions. They also require a Tele-underwriting phone interview to confirm the questions answered on their application. Issue ages: 18 to 45
United Home Life
If you want a policy without an underwriter reviewing your medical records, you can get up to $50,000 of whole life coverage from United Home Life. As long as you don’t have any other major health issues you can get a policy issued within a few days. Issue ages are 20-60.