Recently, we have received a number of enquiries from people with diabetes in relation to accessing mortgage protection and life cover. While the issues faced by people with diabetes pre-covid still remain, unfortunately COVID 19 has made the market even more difficult for people with diabetes seeking to purchase a new home.
Mortgage protection is a type of life insurance that is designed to pay the outstanding balance of a person’s mortgage should they die before the debt is paid off. While it is not required by law, for the majority of us, banks and lenders will usually insist on it. There are exceptions to this for example for applicants over 50 years of age where the market declines to quote or the premiums are prohibitive cost wise.
However, banks and lenders typically insist on mortgage protection and if you do not have mortgage protection, a bank or lender can refuse to give you a mortgage. Sometimes, lenders will agree to a “waiver” where an applicant can show he/she has been declined cover by 3 Life Insurance Companies. The bad news is that this is entirely at the discretion of the mortgage provider.
So, no matter how we look at it, unfortunately, obtaining mortgage protection for people with diabetes can be a minefield.
Most people will look for what is known as a decreasing term life assurance policy. This is the most basic and cheapest type of mortgage protection cover and ensures that your home is paid for in the event of your death.
Different insurance companies and brokers will treat people with diabetes in different ways. Some will not even quote for cover while others may expect the person to undergo a full medical examination with a doctor and/or ask your GP to complete a medical report which the insurance company will pay for. Also, much higher premiums are a given, but this does not mean you have to pay over the odds.
It is possible to get mortgage protection if you have been diagnosed with diabetes, but your premiums will depend on a number of factors such as the type of diabetes you have, the duration of diabetes, your recent HbA1c readings, medications, Body Mass Index (are you overweight), if you have existing diabetes complications and whether you are a smoker.
Most people with diabetes who are looking for cover will find that their premiums will be loaded or rated to reflect the level of risk for an insurance provider and in some cases, cover will be declined.
People with poor diabetes control will find it extremely difficult and almost impossible to obtain mortgage protection. A simple measure of this is HbA1c. Ideally your HbA1c should be under 53mmol/mol or 7%. If it is above this, an individual maybe asked to return at a later date when they have improved their diabetes control.
A person may also be refused or delayed cover if some of the other health issues as outlined above are at play so it’s important to plan well ahead and have optimum diabetes control before you apply for cover.
People with Type 1 diabetes can expect to pay 200-450% more on their mortgage protection cover, depending on their diabetes management, while those with Type 2 diabetes can expect to pay 50-200% more. If it is a joint mortgage, only the person with diabetes will be loaded.
In conclusion, if you are contemplating purchasing a new home, take positive action to ensure you have optimum diabetes management, work with your diabetes team to achieve this, ensure you allow yourself plenty of time to investigate your insurance options bearing in mind an application for mortgage protection can take up to 2 months to be processed. Apply for cover well in advance of when you need it to be in place. This will avoid a lot of last-minute frustration and inconvenience, especially if the insurance is needed for a mortgage.
For many years, Diabetes Ireland has worked with ERM Financial Services who continuously monitor market trends from a diabetes perspective. They offer a free audit to people with diabetes to see if they are eligible for a better deal on their existing insurance cover and to potential new clients who can avail of free expert advice to ensure you apply to the best insurance provider for you. ERM can be contacted on 01 8454361.