Beck - I would be utterly astonished if you had diabetes removed from your medical records, because you have been diagnosed, and that becomes part of your medical history, and a fact that can't be erased - unless the diagnosis were found to be incorrect, which seems unlikely.
From my personal perspective, my medical records now hold the status of "Diabetes Resolved", acknowledging my diagnosis then subsequent non-diabetic HbA1c results.
As far as life assurance is concerned, I am very surprised you are being declined due to diabetes. But, it could be a couple of reasons:
Firstly, if you are very recently diagnosed, the life house may want to defer accepting you for cover to see how you get on. T2 diabetes is not usually seen as being a an enormous stumbling block, although it could be expected the premium would go up a bit, because the risk to the company is greater than for a non-diabetic.
Secondly, you may have other medical conditions impacting on the life house's view of you as an individual. Diabetes may be part of their decision, but coupled with other conditions you may have, they may consider you too much of a risk.
It is certainly worthwhile discussing things with an independent financial advisor, who will have knowledge of a wider range of providers than an advisor from say, your bank.
I am not a financial advisor, but have done pieces of work with a couple of large life assurance and investment providers, including in their underwriting areas, so I have a decent grasp of what goes on, and how their views are shaped.
Whether or not you can have your diabetes removed from your medical records. Getting your blood scores into good shape is often very do-able with good application and quite a bit of work.
Good luck with it all.