Life insurance and diabetes

Ways to get cover

There are 3 ways to get cover:

• as part of your superannuation 
• as part of employment benefits 
• by buying personal life insurance 

There are 5 main types of life insurance:

• death – may pay a lump sum on death
• terminal illness – may pay the equivalent of the death benefit if you have less than 2 years to live
• total and permanent disability (TPD) – may pay a lump sum if you are permanently unfit to do your usual job or any other suitable work with your education, training or experience 
• income protection – may pay monthly payments up to 75% of your salary if you are unfit to do your usual job for 2 years or more
• trauma – may pay a lump sum if you are diagnosed with a specific medical condition.

Superannuation & Insurance 

Your employer must pay superannuation equivalent to at least 11% of your salary into a superannuation fund. 
 
Super funds include insurance benefits for death, terminal illness, TPD and/or income protection (but not trauma).
 
Most employment super funds have default insurance cover, including for pre-existing conditions, so long as you are capable of doing your job and join within 6 months of starting work. However, the type and amount of cover will vary from fund to fund.
 
When you start a job, you will usually have the option of choosing any existing super fund you already have or another fund of your choice. You might be able to pick a second super fund giving you 2 lots of insurance cover.
 
Steps for getting insurance through super:

• when you start a job check what the nominated super fund is (usually your existing super fund or one nominated by your employer)
• check what default insurance cover it includes
• consider which fund to choose to maximise your insurance 
• DON’T change jobs, reduce your hours of work, cease work or change super funds without checking your insurance 
• get advice

Employment Insurance 

Some employers offer group life insurance including income protection (and perhaps also TPD and death cover) as part of employment packages.
 
Many provide default cover, including for pre-existing conditions. If so, you will be covered for your diabetes. If not, you will be covered for injuries/sicknesses that happen after you join.
 
You will lose the cover if you leave the employment, although some policies give you the opportunity to continue the cover if you apply within say 30-60 days of leaving.

Personal Life Insurance

Buying personal life insurance is possible for people living with diabetes.
 
You can either apply for full underwritten cover (usually though a life insurance broker or agent) or for limited cover through direct on-line sales. 
 
If you apply for full cover, you will usually have to fill in a health questionnaire and disclose your diabetes and maybe also have blood tests, a medical examination and provide a report from your doctor.
 
Depending on your state of health and capacity for work, you may get full cover. However, the insurer may apply underwriting restrictions such as an exclusion for diabetes-related claims, reduced cover or increased premiums. This underwriting process could take 2-3 months. 
 
If you apply for direct sale or online cover, you may have to answer a few questions about your health but you won’t have to do a full medical assessment. However, the policy will usually exclude all pre-existing conditions, including if you already have diabetes. 

If you are offered life insurance cover under either of the above, you can accept it or look elsewhere.

Claims and Complaints

If you are refused cover or if you have cover and make a claim which is rejected or delayed, you have rights of appeal.

Life insurers are bound by a Code of Practice in dealing with applications for insurance cover and claims, including what information and medical reports they can demand, time limits and complaints handling.
 
If they breach the Code or reject/delay a claim, you can lodge a formal complaint or appeal to the Australian Financial Complaints Authority (AFCA) here or court.

Get Help

It’s really important to get advice about what insurance cover you have or can get and also before you make decisions such as leaving work, changing jobs, reducing your hours of work or changing your super fund/ insurance.
For free legal advice you can contact Berrill & Watson Lawyers on (03) 9448 8048 or info@berrillwatson.com.au.
Disclaimer: Please note Diabetes Victoria staff do not have any person or financial arrangement with this company. 

Further information
For more information on insurance visit the WorkWelfareWills website.  This is a plain English guide to legal issues around health and life changes.
You can also contact our advocacy team on 1300 136 588 or email advocacy@diabetesvic.org.au