Type 2 Income Protection / Self Employed

You might want to have a look at this: http://www.specialrisksbureau.co.uk/health-conditions/diabetes-type-1

Cheers

Doug

bkr said:

Thanks Doug, just having a read.

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Income protection is a very complex product and the underwriting process is even moreso, as there are so many factors taken into account, never mind individual provider preferences and existing book risks.

I don't know what you're actually applying for, but the riskier your occupation; desk driver versus deep sea diver (OK extremes there) will have a significant impact on the cover offered, or onot, as well as the time after which you would like the cover to start - usually known as the Deferred Period or Waiting Time. The shorter the deferred period, the riskier the policy is to an insurer.

Obviously any medical history for you, and your family (siblings, mother and father) will be taken into account for familial issues, and any conditions you have been diagnosed with. Sadly, a diabetes diagnosis throws another factor into the mix. You may be extremely well now, but the insurers are looking into the future, and sometimes by a very long way. On that basis, they will refer to their company history experience, but industry stats and likelihood of anything arising. The difficult thing about diabetes (like a few other conditions) is that at some point in the future, should, say kidney disease occur, who knows whether that is diabetes related, or unlucky. Similarly, something like a heart attack; lots of people, unfortunately, have them. Who knows whether all such events occurring in diabetics are diabetes related or were going to happen anyway.

Bottom line is, I think you need to understand more, from your financial advisor about what is actually going on. Are you being declined due to:
- medical underwriting
- term of the policy (younger end date is easier to achieve than something until you are older)
- waiting period; If you are able to self-cover the early period of illness, the risk to the insurer reduces)
- amount of cover
- occupation; sadly some occupations are simply not covered
- style of cover; own occupation versus any occupation - where if you're unable to do your own job, as opposed to being able to work at all, makes a massive difference

Do you see what I mean?

I know all of that focuses on your Income Protection query, but some of those factors apply for life cover too - like the term of the policy and amount of cover.

Good luck with it all.

bkr said:

Thank you for taking the time there, I do see what you mean - you raise some very good points that Ill bring up in our next meeting - Im mainly desk work but the future health implications are very real.
It does all make me a little sad as most folk dont have to jump through these hoops, given they are less risk. I guess its a bigger gamble for the companies & they prefer the safe bet. Im not sure why I have been declined but Im hoping to find out.

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Everyone jumps the same hoops, but some folks just tick all the better boxes, unintentionally - young, desk workers, fit, healthy, good BMI, no family history and no skydiving hobbies. There are lots of those folks around, really.

You do need to have the conversations though, so that you can make an informed decision about your reasonable next steps.

(Can you guess I've done a load of work with Life Underwriters and Actuaries?)

bkr said:

Yes I can, you seem to know your onions

I'd like to think I fit that description, its reassuring in a way. I just had my meeting & it seems that The Exeter / MDG wont touch my scenario even though its fairly standard. I asked about an income protection policy but he wasnt comfortable endorsing one as in his experience they'll find any excuse not to pay out & dont offer the peace of mind you'd ideally hope for.

A bit lost with that one, I see where he is coming from but it doesnt help things where covering my mortgage is concerned if I were to break something or just be full of flu.

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Undoubtedly, you do have to approach this with your eyes open, and arguably, a policy based on "any occupation" would be very hard to make a claim upon. I, personally, would never have one, and I'd always had IP when I was working in a "proper job".

I've just realised you are in Australia, when I looked up MGD, who meant nothing to me. I've had a look at their website, but can't really ascertain what level of authorisation they have. The required declarations are obviously different.

If you have their terms of business or terms and conditions documents, it should, ideally, clarify if they are authorised to advise on companies from the whole of the available market (all providers) or just a single company or panel of companies. If it is the latter, it could be helpful to have a consultation with a firm able to make the broadest assessment of your circumstances.

I know you state you are healthy. I absolutely describe myself that way too, but unfortunately your T2 diagnosis is a risk to a company that could potentially be saddled with paying you millions of pounds/dollars over the remainder of your working life, if you got unlucky. You may "only" want to ensure £/$x, but if you were unfortunate enough to make a claim in the near future, for whatever reason, the amount payable, usually index linked, all adds up to potentially a very scary amount, if your claim lasted for the balance of your working life.

On your parting note, I would urge you to stop thinking of this as an insurance should you get flu. It's the sort of insurance for long term illnesses. Usually there will be a 4, 13, 26 or even 52 week waiting period, during which time you would not be eligible to make a claim. Doing anything to kick in immediately, or before 4 weeks, and payable for more than 12 months, would be cripplingly expensive, and in your shoes, I would be trying to build a financial buffer to insure myself against any such event. That isn't financial advice, but common sense.

Please don't interpret my postings as un-supportive to your quest; they aren't. I fully understand why this style of cover is attractive, but I am expressing your situation as viewed by "the other side".

Good luck with it all.

(You do still need to understand why you have been declined.)

@bkr my husband is self employed and had an aortic aneurysm operated, an aortic valve replacement and a pacemaker fitted 9 years ago. My brother is a financial advisor and looked at various policies but said that they would be expensive and we would be better off paying monthly into an ISA which we did. He recently broke his arm and was off work for 9 weeks which meant that we had to use our ISA fund but it has worked out. The ironic thing though is that, because we had saved the money, he was not entitled to any sickness benefits from the govt because we had some savings!

bkr said:

@AndBreathe You're right about future claims, that makes a lot of sense - Im seeing it based on the now & small incidents in the future being minor setbacks but that maynotbe the case. As much as I dont feel like im in denial about my condition I hope for a better day, looking after myself & trying to maintain a positive outlook.

Im in the UK, this is the link if you wanted a gander - https://www.the-exeter.com/health-insurance (if it wasnt this you checked, im unsure) It is frustrating that some of the larger companies do cover diabetes but not this, although it was mentioned that Zurich would but at double my premiums which steers me towards the ISA angel as Daphne mentions. I did have IP too when I was salaried, I dont think I appreciated how good that was looking back.

Thank you for your thoughts on this, its given me something to think about - I do see them as supportive ( ) as many angles have to be considered.

@Daphne917 that sounds like a good idea, my financial advisor explained a similar scenario to me as at least every penny invested is accessible. I recall that government frustration from a good few years ago when I was made redundant, penalised for being savvy with your money grr

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Ah,........ I though of The Exeter, but it was the MGD reference that skewed my thinking.

To be honest, you need to talk to a truly independent financial advisor. There are a number of companies operating in the IP and general health insurance arenas. The Exeter wouldn't have been on the tip of my tongue had you asked me to name a few.

Zurich are certainly a good sized provider, but you have Aviva, L&G, Friends Life (currently being partly acquired by Aviva,) Scot Eq, plus a few truly niche providers.

I would urge you to consider taking a two pronged approach of saving a rainy day pot and, if possible, insuring the potentially bigger claims. The longer waiting period (therefore the longer you would have to self-fund), the lower the premium. With luck, you end up with a nice little pot of wellbeing reward, if you don't make a claim. Nice incentive! Many people adopt this approach to medical insurance.

Good luck with it all.

Again, I reiterate, this is not and should not be construed as financial advice, because I'm not a regulated individual! (Phew.)