A new term life insurance policy for diabetics: High premium but much-needed financial security, should you buy?

It is difficult to buy a life insurance policy if you have pre-existing medical conditions such as diabetes. If you have diabetes, life insurance companies either deny you insurance based on their underwriting policies or charge you a hefty amount of premium for issuing a policy.

Bajaj Allianz Life Insurance has now come up with a term insurance plan specially designed for people who have diabetes. Touted as Bajaj Allianz Life Diabetic Term Plan Sub 8 HbA1c, it is a pure term life insurance cover. In case of the death of the policyholder, the sum assured will be paid out to the nominee. There will be no maturity benefit if the policyholder survives the policy term.

Mentioning the reason behind a term insurance plan especially targeted at diabetics, Tarun Chugh, MD & CEO, of Bajaj Allianz Life, said, “A significant number of India’s population who are diagnosed with diabetes are currently under-insured. With diabetes being termed as a chronic disease, those diagnosed with it find it challenging to get comprehensive life cover to financially secure their family’s needs. With this first-of-its-kind term plan designed for diabetics,.. we will be able to help several Indians secure their family’s long-term financial plans by giving them well-deserved peace of mind.”

Who is eligible to buy Bajaj Allianz Life Diabetic Term Plan Sub 8 HbA1c?

Only Type 2 diabetics with HbA1C levels of up to 8 and pre-diabetic individuals are eligible to buy this cover. HbA1c reflects average plasma glucose over the previous eight to 12 weeks. For pre-diabetics, the HbA1C level stays between 5.7 per cent and 6.4 per cent, according to Indian Council for Medical Research. Diabetics have HbA1c level of 6.5 per cent or above.

Bajaj Allianz Life Diabetic Term Plan Sub 8 HbA1c policy: Key policy details to know
The minimum entry age will be 30 years and the entry age goes up to 60 years for this plan, as per policy document. The minimum policy term will be for five years. Bajaj Allianz Life Diabetic Term Plan Sub 8 HbA1c can be held for 25 years. The minimum sum assured will be Rs 25 lakh. There is no maximum limit of the sum assured and it will be subject to the company’s underwriting policy.

Bajaj Allianz Life Diabetic Term Plan Sub 8 HbA1c premium
For a 35-year-old male non-smoker pre-diabetic with a sum assured of Rs 50 lakh and an annual premium payment option, the premium will be Rs 13,533 for a policy of 20 years, according to the policy document. Policyholders will get an option to pay yearly, half-yearly, quarterly, and monthly premiums. Policyholders can buy Bajaj Allianz Life Insurance online.Bajaj Allianz Life Diabetic Term Plan Sub 8 HbA1c: What are the benefits?
In case of death of the policyholder during the policy term, provided the policy is in force, the nominee/legal heir will receive the sum assured on death (as chosen by the policyholder at the time of buying the policy). The policy will terminate up on the death of the policyholder. Sum assured on death will be higher of a) 10 times annualised premium, b) 105 per cent of total premiums paid till the date of death, c) the sum assured.

As this is a pure-term insurance product, no benefit will be payable on survival till maturity.

Bajaj Allianz also offers additional benefits to policyholders for staying fit and improving health conditions. Policyholders will be eligible for a 10 percent discount on the base premium at renewal the following year if they can bring down their HbA1c levels.

Bajaj Allianz Life Diabetic Term Plan: Should you opt for it?
When compared with a regular term plan for a non-diabetic individual, the premium for Bajaj Allianz Life Diabetic Term Plan Sub 8 HbA1c is around 1.75 to 2 times higher for the increased risk, said Dev Ashish, a SEBI Registered Investment Advisor and founder of StableInvestor. Explaining it further, he said, “For a 40-year-old with diabetic with HbA1c level of 7 and policy term of 25 years and sum assured of Rs 1 crore, the premium of a diabetes term plan is about Rs 23-24,000 while that of a regular term plan is about Rs 11-12,000 annually (the actuals might vary more based on the level of diabetes and other factors).”

Policyholders have to bear the additional burden of the premium for their health condition as they come with a relatively higher risk of death or illness. However, do keep in mind that for diabetics, a traditional term plan has only a 30 per cent chance of issuance, while a dedicated diabetic term plan has comparable issuance for diabetics similar to issuance of non-diabetics for traditional term plans, said Rhishabh Garg, Head-Term Insurance, Policybazaar.com.

“The premium for a 30-year old diabetic non-smoker is more than twice of what is charged for a non-diabetic non-smoker. However, people who were earlier denied term plan policy or are diabetic with HbA1c level below 8 can consider this policy,” said Abhishek Kumar, SEBI Registered Investment Advisor and founder of SahajMoney.

Do compare term plans from other life insurance providers as well based on your health parameter (diabetes loading), you might get a cheaper deal, he added.

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