Children’s life insurance has long been a topic that brings up a range of reactions. There are those who don’t want it and don’t want to talk about because, after all, why would anyone want to talk about children dying prematurely?
There are those who buy life insurance riders or stand alone children’s policies, not because they need the death benefit financially, but because the policies have a been in guaranteed issue life insurance feature so that, no matter what your child’s health when they reach adulthood, they can convert their policy to an adult size policy of their own without evidence of insurability.
Then there are those who have children with chronic health issues such as type 1 diabetes who are angry because life insurance companies decline their children the ability to have life insurance. It is this group that I have focused on in the past when I launched on a quest to find out why, when a child has a health issue, it is treated differently than it would be in an adult. What I found was that underwriters were not necessarily concerned about the mortality of children, but rather they simply claimed they did not have any mortality risk data specifically for children.
I got an email this morning that The Diabetes Blog was being discontinued. An outstanding forum for those with diabetes or those trying to learn more about diabetes, the blog closed it’s doors with a list of the top 5 posts. One of those, written by Allie Beattie, was on this very subject commenting on a blog I wrote in 2007. Allie and I traded information for some time trying to find a company that would break free from the cookie cutter underwriting and step out there for the kids.
At first this seemed like a surmountable task since the truth is that the morality statistics are in fact fairly low for children diagnosed with type 1 and, since most children’s policies are small, averaging $10,,000, the exposure was small. It simply isn’t like a company would be hanging it out there without adequate information on a group asking for $500,000 on average. The mission so far has been a bust, but it continues. The risk, as one contact told me, is minimal as the majority of type 1 diabetic deaths in children lies with those who die before being diagnosed. Once diagnosed and treated the mortality risk plummets to almost nothing.
Meanwhile Allie has moved on to a blog of her own, and true to form is prolifically blogging about the ups and downs of life with type 1 diabetes.
But back to the deaf ear that our children are getting from life insurance companies. Life insurance for healthy children is generally underwritten at standard rates like simplified issue insurance for adults. The lack of exam (no blood and urine), coupled with the lack of medical history, leave companies with a need to pad things a bit by not offering preferred rate classes. So, they underwrite “healthy” children at standard rates not really even knowing if they are healthy or not.
It has been my contention, and the lead argument in my quest for those with health issues, that the companies could issue policies just like they do standard rate policies, by simply assuming a higher rate class. Perhaps rather than a standard rate, children who have diabetes or other low mortality health issues could be underwritten at an assumed table 8 rate class. This would be 200% more than a standard rate and would provide the same kind of “padding” that a standard rate does for a seemingly healthy child.
Again, given the relatively small exposure (number of insureds) and the relatively small insurance amounts ($10,000), mortality experience doesn’t really have to be looked at. Keep in mind that I’m not suggesting guaranteed issue life insurance where a company would take on a risk that they know is fatal in a fairly short period of time. I am suggesting that while companies may not be in possession of mortality statistics specifically for children, they do have the knowledge to make educated guesses and with such small exposure to payout on death benefits, that is good enough.
Bottom line. The war continues. I’ve certainly lost a lot of battles, but in fairness to the children and to those like Allie Beattie who tirelessly fight on the right side of the diabetes battle, I’m not giving up. Just an fyi, TUDiabetes has stepped as an admirable forum and advocate for those with type 1 and type 2 diabetes.