Underwriters do not price the word diabetes. They price three things: how long you have had it, how well it has been controlled over time, and which complications have appeared. Two 74-year-olds with the same diagnosis and very different charts get very different estimates.
Households usually reach this question because the premium on a policy bought decades ago has grown into the largest fixed expense in the budget, and someone has said that a health condition might make the policy worth something. That is true and it is also easy to misread in both directions.
Rather than describe the process abstractly, this page carries one household’s arithmetic all the way through: what the policy costs to keep, what surrender would pay, what a range of outcomes looks like, and where the break-even sits. Substitute your own numbers as you go. Pine Lake Legacy provides education and a free policy review only, and does not give medical, legal or tax advice.
In This Article
The Household and the Contract
Harold is 74. He was diagnosed with type 2 diabetes in 2008, so eighteen years of duration as of 2026. He takes a long-acting insulin plus two oral agents. His most recent A1c was 8.4 percent. He has diagnosed peripheral neuropathy, stage 3 chronic kidney disease with a reduced estimated glomerular filtration rate, a myocardial infarction in 2019 treated with a stent, and he was hospitalized once in 2024 for a foot infection.
His wife Carol is 72, has her own Social Security and a small annuity, and would not be financially dependent on a death benefit. Their two children are adults with their own households.
The policy is a universal life contract issued in 1999 with a $300,000 death benefit. The current planned premium is $800 a month, or $9,600 a year, and the most recent annual statement shows account value of $13,400 and a cash surrender value of $8,900 after a surrender charge. There is no outstanding policy loan and the contract is long past its contestability period.
Their combined income is about $5,900 a month. The premium is 16 percent of it. That is the pressure that put them here, and the arithmetic below is the reason the decision is not obvious in either direction.
What the Chart Actually Says to an Underwriter
Medical underwriting firms convert a record into a projected life expectancy, usually expressed in months with a mortality multiplier relative to a standard table. For diabetes, five things move the number.
Duration. Eighteen years is long, and duration is one of the strongest inputs because complications accumulate with exposure.
Control over time, not at one point. The American Diabetes Association’s Standards of Care define diabetes at an A1c of 6.5 percent or higher and prediabetes at 5.7 to 6.4 percent, and generally suggest a goal below 7 percent for many nonpregnant adults, with less stringent goals — often under 8 percent — appropriate for older adults with limited life expectancy or multiple coexisting conditions. Harold’s 8.4 percent is above even the relaxed goal. What matters more is the trend across several years, so the file should include every A1c available rather than the most recent one.
Complications. Neuropathy, retinopathy, nephropathy with a documented eGFR, cardiovascular events, and any amputation or non-healing wound. Harold has three of these categories documented.
Treatment intensity. Insulin use, particularly long-standing insulin use in type 2 diabetes, is read differently from diet control.
Everything else in the chart. Body mass index, smoking history, blood pressure control, hospitalizations and functional status.
Harold’s file reads as long-duration, imperfectly controlled diabetes with established macrovascular and microvascular complications. Our page on how life expectancy underwriting works explains what those reports contain and why two firms can differ on the same chart.
The Cost of Keeping It: The Arithmetic Nobody Runs
Start with what the current path costs. At $9,600 a year, holding the policy to age 85 is eleven more years and roughly $105,600 in premiums — and that understates it, because on a universal life contract the cost of insurance charge rises with attained age, so the premium required to keep the contract funded generally increases over time. Ask the carrier for an in-force illustration run at the current premium and at the minimum premium to carry to ages 85, 90 and 95. That document, which is free, converts this paragraph from an estimate into Harold’s actual numbers.
Now the alternatives, with the figures attached.
Surrender today: $8,900, irreversible, and the premium obligation ends. That is 3.0 percent of the face amount.
Reduce the death benefit: lowering the face amount on a universal life contract generally lowers the monthly cost of insurance charge. Ask for illustrations at $300,000, $200,000 and $150,000 to see what each premium becomes. If $150,000 of coverage costs $3,900 a year instead of $9,600, that alone may resolve the household’s problem.
Stop paying and let account value carry it: $13,400 of account value against monthly deductions buys some months and then the contract lapses. Get the projected lapse date in writing. This is the path families take by accident and it is the worst of the five.
A secondary-market review: the federal Government Accountability Office’s study of the market found sellers typically received roughly 10 to 35 percent of face value. On $300,000 that range spans $30,000 to $105,000. It is a range from a 2010 federal study, not a quote, and results fall outside it in both directions — but even the bottom of it is more than three times the surrender value.
| Option for Harold | Cash Now | Future Premiums | What the Family Ends Up With |
|---|---|---|---|
| Keep paying as is | $0 | About $9,600 a year and rising | $300,000 death benefit, if he can sustain it |
| Reduce the death benefit | $0 | Lower; ask for illustrations at $200k and $150k | A smaller benefit that is actually affordable |
| Stop paying, let account value carry it | $0 | $0 | Nothing, once the contract lapses |
| Surrender | $8,900 | $0 | $8,900, or 3.0 percent of face |
| Secondary-market review | Range; GAO found 10-35 percent of face typical | $0 after closing | Cash plus premiums avoided; no death benefit |
| Accelerated death benefit rider | Depends on the rider terms | May continue | Part of the benefit early, if certified eligible |
The Break-Even, and the Version Where the Answer Flips
Set the comparison as cash in hand plus premiums no longer paid, against the death benefit the family would eventually receive.
Suppose a review produced an offer of $54,000, which is 18 percent of face. Harold receives $54,000 and stops paying $9,600 a year. If he lives eleven more years, the family avoided $105,600 in premiums and took $54,000, a combined position of roughly $159,600 against a $300,000 benefit received in year eleven. If he lives four more years, they avoided about $38,400 and took $54,000, or $92,400, against $300,000 received in year four. The shorter the remaining life, the worse a sale looks relative to holding — which is the exact opposite of most people’s intuition, and it is why the decision should never be made on the diagnosis alone.
The variable that resolves it is whether the household can actually keep paying. A policy that lapses in year six pays nothing at all, and $9,600 a year out of $70,800 of income is not sustainable through a care event. The realistic comparison for Harold is not sale versus holding to death; it is sale versus lapse.
Now change one fact. If Harold were 74, newly diagnosed in 2023, A1c 6.6 percent, no complications, no cardiac history, the projected life expectancy would be far longer, offers would compress toward nothing, and the correct answer would almost certainly be to reduce the death benefit and keep the coverage. Same age, same policy, same diagnosis, opposite conclusion. Our page on reading an in-force illustration is where that comparison starts.
The Documents That Change the Number
Everything above depends on what is in the file. Assemble it in parallel, not in sequence.
From the endocrinologist or primary care physician: every A1c result available with dates, the current medication list including insulin type and dose, blood pressure readings, and the most recent comprehensive metabolic panel with eGFR and urine albumin results. From the ophthalmologist: the diabetic retinopathy screening result. From the podiatrist or wound clinic: neuropathy documentation and any wound history. From the cardiologist: the catheterization report, the stent details and the most recent echocardiogram or stress test. From each hospital separately: discharge summaries for the last three years.
Under the federal privacy rule you have a right of access to your own records and a provider generally must act within 30 days, with one 30-day extension permitted. Fees are limited to a reasonable, cost-based charge, and portal downloads are usually free and fastest.
Two policy-side documents matter as much. The in-force illustration described above, and the rider schedule — because an accelerated death benefit rider or a waiver of premium rider may already provide the relief the household needs without any transaction. Payments under a qualifying accelerated death benefit are generally excluded from income under Internal Revenue Code section 101(g) for a terminally or chronically ill insured.
Note the timing: life expectancy reports commonly have a six to twelve month shelf life with buyers, so gather records close to when they will be used, and keep the policy in force throughout.
When Selling Is the Wrong Answer With Diabetes
Four situations make a sale clearly wrong, and Harold’s household escapes all four — which is precisely why it is worth naming them.
The face amount is small. Below roughly $100,000, secondary-market offers are thin and the process costs months of records gathering. Reduced paid-up options or simply keeping the policy are usually better.
The insured is well controlled with no complications. Long-standing diabetes at target with no organ involvement produces a long projected life expectancy and offers near zero. If Harold were that person, the honest answer would be no.
Someone needs the death benefit. If Carol’s income would fall sharply at Harold’s death, the coverage is the plan and the premium problem has to be solved another way — by reducing the face amount rather than by selling. Our page on when keeping the policy is the right answer works through that case.
The policy is a small burial or final expense contract already earmarked for a funeral. Converting it to cash can turn a resource often disregarded for benefits purposes into countable money.
Where none of those apply and the premium is genuinely unaffordable, the practical order is: request in-force illustrations at several face amounts, read the rider schedule, get the surrender value in writing, and get an independent read on secondary-market value. All four are free and none of them commit you to anything. Send the policy cover page and the most recent annual statement for a free policy review, or call (732) 978-9575.
Frequently Asked Questions
Does having diabetes automatically make my policy worth more?
No. Underwriters price duration, control over time and documented complications rather than the diagnosis. Long-standing insulin-treated diabetes with kidney, nerve or cardiac involvement reads very differently from well-controlled disease with no organ damage. A well-controlled case often produces a long projected life expectancy and no meaningful offer at all.
What A1c do underwriters consider poorly controlled?
There is no single cutoff used across the industry. For context, the American Diabetes Association Standards of Care define diabetes at 6.5 percent or higher and generally suggest below 7 percent for many nonpregnant adults, with less stringent goals often under 8 percent for older adults with limited life expectancy. What underwriters weigh most is the trend across years plus complications.
Should I try to improve my numbers before a review?
Manage your health for your health, with your physician, and do not make medical decisions around a financial process. That said, the record reflects years of history, not a single recent reading, so a short-term change is unlikely to move an estimate. Gather every A1c result available so the file shows the actual trend rather than one data point.
How much of the premium problem can reducing coverage solve?
Often most of it. On a universal life contract, lowering the face amount generally lowers the monthly cost of insurance charge, sometimes substantially. Ask the carrier for in-force illustrations at the current face amount and at two lower ones. It is free, it takes a couple of weeks, and it frequently resolves the situation without any transaction.
What documents do I need to gather?
Every A1c with dates, the current medication list, the most recent metabolic panel with eGFR and urine albumin, the retinopathy screening result, any neuropathy or wound documentation, cardiology reports, and hospital discharge summaries for three years. Providers generally have 30 days to respond to a records request. Portal downloads are usually free and fastest.
Is it better to surrender if I cannot afford the premium?
Get both numbers before deciding. Cash surrender value is what the carrier pays to end the contract and is the floor rather than a valuation. An independent review of secondary-market value costs nothing and does not commit you. Also read the rider schedule first, because an accelerated benefit or waiver of premium rider may already solve the problem.
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Related Reading
- What Is Life Expectancy Underwriting
- Sleep Apnea And Underwriting
- Cardiac Stent And Underwriting
- What Is An In Force Illustration
- Keeping The Policy Is The Right Answer
- Surrender Vs Sell Policy
- How Much Can I Get For My Life Insurance Policy
- What Is A Life Settlement
Pine Lake Legacy does not purchase life insurance policies and does not provide legal, tax, or investment advice. Information provided is for educational purposes only. Eligibility for any option, including life settlements, is not guaranteed and depends on individual circumstances, policy terms, underwriting, and market conditions. Consult independent legal, tax, or financial professionals before making decisions regarding a life insurance policy.