If you’re new to insurance, you may find yourself wondering precisely what life insurance covers. That’s largely up to you. Let’s take a closer look at what life insurance is and the kind of things your family would use it for.

The basic concept of life insurance is quite simple. If you were to die during the term of your insurance, your beneficiaries will receive an insurance payout. How much that will amount to depends on the terms of the insurance policy you choose. As the person who calls the shots, you’d try to choose a policy based on what you think your beneficiaries (usually your family) are likely to struggle with financially if you weren’t there anymore.

What Things Would a Life Insurance Payout Go Towards?

The loss of a loved one is hard to process, but the financial burdens that follow your death can cause even more pain. It will take some time for your executors to wind up your estate, so even if you are leaving a substantial legacy, your family would still have to cope with their living expenses in the interim.

Usually, it takes eight months to a year to finalise an estate, and if it’s a complex one, it could take as much as two years. If you were the primary income earner, or contributed a substantial amount to your household’s expenses, the wait could be an uncomfortable one. What does life insurance cover? It could certainly provide much-needed financial relief while your family waits for your estate to be wound up. But it doesn’t end there.

If you have co-signed debts, your share of them will pass to your co-signatories. That could mean less financial pressure on your next-of-kin - but not if the co-signatory is part of your immediate family. Your personal debts will be paid out of the estate, but since this might include assets that your surviving family members need, that could present a problem. Your mortgage is a good example of this.

If you have a mortgage, any outstanding amount will be recovered from your estate. However, if your estate doesn’t cover the debt, it will be up to your family to meet the shortfall if they don’t want the family home to be sold. There’s also the matter of care for your dependents or children. And, of course, the finances that will be needed to cover the cost of your children’s education.

When calculating how much life insurance you need, and which policy to choose, you’d have to carefully consider what you want life insurance to cover. It should represent the total amount of all the things you want life insurance to do for your family.  

What Does Life Insurance Not Cover?

Just having up-to-date life insurance may not mean that your family has financial protection. If insurers can prove that you concealed any health-related information from them when you took out the policy, they will refuse to pay. That’s why it’s important to be absolutely honest when applying for insurance.

When you review a policy document, pay special attention to exclusions. For example, some insurers may offer what seems like a good deal to someone who has diabetes - but exclude cover if your death relates to your illness. That means that if you were to die from a heart attack or a stroke, you have no cover at all.

Other exclusions may include death as a result of war or terrorist activity, drug or alcohol use, risky activities or negligence, and so on. The moral of the story? Always read the fine print before committing to any agreement, and especially one as important as your life insurance policy.

Can I Get Life Insurance if I Have Diabetes?

The simple answer is “yes.” But there can be complications. Insurers have the right to decide whether they’ll provide cover after reviewing your application. In most instances, they’ll see diabetes as a red flag.

They may turn you down outright. They may demand medical reports and a great deal of extra information. They may offer life insurance with extra exclusions that could render it nearly useless. Or they might just offer you life insurance based on the assumption that you're a high-risk client, which means you’ll pay much higher premiums than the average person does.

Given that well-managed diabetes need not have much of an influence on your life-expectancy, it’s not really fair that insurers are inclined to assume the worst. Can you get life insurance that will give you a solid offer without all the caveats, generalisations, and disproportionately inflated premiums? Once again, the answer is “yes,” but you’ll have to look for a very special insurance company.

Blueberry Life offers people with chronic conditions more than just reasonably-priced insurance. We offer a route towards a healthier lifestyle and a longer life, incentivising your healthy lifestyle choices along the way. This could be the life insurance you’ve been waiting for because we see you as an individual and not just a statistic.  Life insurance for type 2 diabetes is going to be much more than just a dose of peace of mind. Get the ball rolling right away. It’s as easy as filling out an online application - all you need is 5 minutes to tell us about yourself.

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This is a blog and should not be taken as financial advice.