Five insurance tips for those living with diabetes

World Diabetes Day is an annual campaign developed by the International Diabetes Federation to raise awareness about the seriousness of diabetes, which the Federation reports currently affects 387 million people worldwide.*

With the 2015 World Diabetes Day event being held on Saturday 14th November, it’s a timely reminder about insurance cover which may be available to support people suffering from this disease.

Some people may not be privy to the fact that life insurance can help manage the medical fees and living costs associated with a medical event, such as diabetes.

While everyone’s financial situation is different, these five tips will help to guide you through different types of cover which may be available through various products and insurers.

1. Living insurance can help cover medical costs

Living insurance (also known as trauma insurance) can provide a lump sum payment, among other benefits for people suffering from one of a range of specified medical events, including advanced diabetes. A lump sum payment could be crucial to helping someone living with the disease, to assist with any financial strain that may come with associated medical expenses. Living insurance proceeds can also be used to reduce debt to allow more flexibility with work, such as working part-time or changing careers.

Partial living payments can also be made for diabetes complication which meet the policy definition and criteria, where a portion of the total sum insured can be paid, up to a maximum limit.

2. If you become disabled and can no longer work, total and permanent disability (TPD) insurance can apply

In more serious circumstances, if a disease such as diabetes is so far advanced that it causes you to become totally and permanently disabled as defined under the policy, TPD insurance can pay a lump sum benefit.

There can be two main types of TPD insurance – ‘own occupation’ and ‘any occupation’. Generally own occupation TPD insurance proceeds can be paid if you are permanently unable to work in your current occupation. Any occupation TPD insurance proceeds can be paid if you are permanently unable to work in an occupation that you would be suited to with your education, training and experience. However, this will differ depending on the definition of TPD under your policy. Some policies may still pay a benefit if you are able to work, but in a reduced capacity. An ‘own occupation’ TPD definition is more likely to be met as the definition is generally more generous. However, own occupation TPD premiums tend to be approximately 50% more expensive than any occupation TPD premiums.

Your financial adviser can help you with determining what type of TPD policy is most suitable for you.

3. Through income protection (IP) insurance, generally you can cover up to 80%^ of your monthly income, assisting with living costs and partly covering lost super contributions

IP payments replace part of the insured’s income in the event they are disabled due to sickness or injury and unable to work.

IP insurance can provide a monthly benefit that can generally replace up to 80% of your income. This can ensure that bills such as mortgage repayments or rent, electricity and school fees can be paid, and future super contributions that are lost are partially offset, if you are temporarily ill or injured.

In addition, some IP policies include a crisis benefit, whereby if the insured person suffers for the first time any of the crisis events allowed for in the policy, a benefit can be paid. Therefore it may be the case that if you suffer from advanced diabetes and depending on the policy, if it is included as a crisis benefit, you may be covered.

4. If you need it, look out for insurance policies that offer help for home makers

If you are a homemaker, you can obtain IP insurance, whereby if due to sickness or injury the insured is prevented from carrying out normal household duties they may receive a benefit which can assist to pay for someone to assist with household duties. If it’s not practical or financially viable for your partner to take time off work to run the household throughout that time then IP insurance for homemakers may provide assistance in these circumstances.

5. Term life insurance can help your family pay off debts and maintain their standard of living if you pass away

Term life insurance can pay a lump sum benefit if the insured dies or suffers a terminal illness.

With a BT Protection Plans policy, if you are deemed to have less than 24 months to live, an advanced payment can be made for terminal illness. However not all policies offer this benefit and may restrict payment to circumstances where you have less than 12 months to live, rather than 24.

Claim proceeds can be used to pay off debts and provide funding to allow your family to maintain their standard of living, including continuing to live in your current home, where applicable.

Next steps

To find out what types of cover are most suited for you, first you will have to evaluate your circumstances. This will depend on various factors. If you were to become ill, would you require a monthly benefit to replace a portion of your income and if so, consider for how long? Do you and your family have debts that need to be paid? What assets are available that could be sold quickly?
Not all insurance policies are the same. Often it is difficult to determine how much cover is required and this is where your adviser can step in and help.

By Rachel Leong, Product Technical Manager, Life Insurance BT Financial Group

Important information:

This information is current as at 5 November 2015 and is subject to change.

The Insurer is Westpac Life Insurance Services Limited ABN 31 003 149 157, AFSL Number 233728. The issuer for all the products described in this document, except for Term Life as Superannuation (USI 81 236 903 448 001) and Income Protection as Superannuation (USI 81 236 903 448 004), is the Insurer. For Term Life as Superannuation and Income Protection as Superannuation (part of the Westpac MasterTrust ABN 81 236 903 448, SFN 281 412 940, SPIN WFS0341AU, RSE Registration R1003970 (Westpac MasterTrust)), the issuer is Westpac Securities Administration Limited ABN 77 000 049 472, AFSL Number 233731, RSE Licence Number L0001083 (WSAL). The trustee of Westpac MasterTrust is WSAL. The arranger of policies paid via Platform Super, except for SuperWrap, is Asgard Capital Management Limited ABN 92 009 279 592, AFSL Number 240695. The arranger of policies paid via Wrap and SuperWrap is BT Portfolio Services Ltd ABN 73 095 055 208, AFSL Number 233715.

The Insurer and WSAL are wholly owned subsidiaries of Westpac Banking Corporation ABN 33 007 457 141 (the Bank). None of the Protection Plans, an interest in the Westpac MasterTrust or Platform Super, nor an investment in Wrap, are an investment in, deposit with or other liability of the Bank. Neither the Bank nor any member of the Westpac Group (other than the Insurer) guarantees the benefits payable in relation to Protection Plans.

This information has been prepared by the Insurer and is for use by advisers only. It is not to be copied, used, reproduced or otherwise distributed, circulated or communicated to any retail client or any other party, or attributed to any member of the Westpac Group. The information provided is an overview only, is general in nature and does not take into account any personal circumstances. Neither the Insurer nor WSAL intend that this publication be used as the primary source of the readers’ information, but as an adjunct to their own resources and training. As individual circumstances will differ, independent tax advice may be required by your client. For terms and conditions relating to BT Protection Plans and BT Protection Plans Reserve, including limits and exclusions, please refer to the appropriate Product Disclosure Statement, available at our website bt.com.au.