Can Depression Hospitalization Affect Your Life Insurance Coverage?

Life insurance companies take all health factors into consideration when determining eligibility and policy rates. While insurers are aware that mental illness is not uncommon, and welcome people with mental health conditions, a history of depression can lead to higher life insurance premiums or even coverage denial. This is especially true in cases of severe depression, or a history of hospitalisation or suicide attempts. However, it is important to note that every insurer uses its own proprietary policies and algorithms to determine who it will sell policies to, so even if you are turned down by one or two companies, that doesn't mean that others will do the same.

Life insurance companies' definitions of depression

Life insurance companies consider depression a pre-existing health condition if and only if you've been diagnosed by a medical professional before your application. They differentiate between people with depression into the following three categories:

• Mild depression – up to one type of medication and no history of hospitalizations.
• Moderate depression – those who take more than one medication and consult a psychiatrist.
• Severe depression – those who have suicidal ideation or have attempted suicide in the past.

Postpartum depression is also considered by some insurers as clinical depression, which can mean a higher insurance premium.

If you have a history of depression, the impact on your ability to obtain insurance coverage will vary based on several factors, including how severe your depression is, how long you have been suffering from depression, and any treatments you're currently undergoing or have received in the past.

In most cases, people with a diagnosis of depression can still get life insurance, albeit at a higher premium than someone with no history of mental illness. If your depression is well-managed, you may even be able to get a policy at rates similar to those without a diagnosed mental illness.

How depression impacts life insurance rates

Depression is a common mood disorder that affects how you feel, think, and act. Symptoms range from mild to severe. Life insurance companies take all health factors into consideration when determining eligibility and policy rates. You can get a life insurance policy if you have been diagnosed with depression, but it may impact your rates. Here's how:

Severity of Depression

The severity of your depression will play a significant role in determining your life insurance rates. Life insurance companies typically categorize depression into three levels: mild, moderate, and severe. Mild depression is usually defined as having no history of hospitalizations and taking up to one type of medication. Moderate depression involves taking more than one medication and consulting a psychiatrist. Severe depression includes having suicidal thoughts or a history of suicide attempts. The more severe your depression, the higher your life insurance rates are likely to be.

Treatment History

Your treatment history for depression will also impact your life insurance rates. Life insurance companies view your treatment history as an indicator of how well-controlled your depression is. If you have a consistent and stable treatment history, your rates may be lower. This includes following a treatment plan, taking prescribed medication as directed, and seeing improvements in your symptoms. Inconsistent treatment records or refusal to take medication may result in higher premiums.

Hospitalizations

Recent or multiple hospitalizations due to depression can significantly impact your life insurance rates. Hospitalizations are often seen as an indicator of more severe depression and higher risk. Life insurance companies may postpone your application for at least a year following a hospitalization. The longer it has been since your last hospitalization, the lower the impact on your rates.

Medication Usage

The number of medications you take for depression can also affect your life insurance rates. The fewer medications you take, the more favourable your rates are likely to be. Taking multiple medications may indicate a more complex or severe form of depression, leading to higher premiums. However, if your condition is well-controlled, even with multiple medications, you may still be able to qualify for preferred rates with some insurance carriers.

Suicide Risk

Life insurance companies consider suicide risk to be a significant factor in determining rates for individuals with depression. All life insurance policies include a suicide clause, stating that the insurance company will not pay the death benefit if the insured dies by suicide within the first two years of the policy. A history of suicide attempts or suicidal thoughts will be thoroughly investigated by the insurance company. The higher the suicide risk is deemed, the higher your life insurance rates are likely to be.

Lifestyle and Health Factors

In addition to depression-specific factors, life insurance companies also consider your overall lifestyle and health. This includes your age, job, lifestyle choices, general health, and mental health status. Factors such as high cholesterol, reckless driving, or other high-risk behaviours can contribute to higher rates. Maintaining a healthy lifestyle and managing your overall health can help mitigate the impact of depression on your life insurance rates.

It's important to note that while depression can impact your life insurance rates, it does not automatically disqualify you from obtaining coverage. The impact of depression on your rates will vary depending on the insurance carrier and their underwriting guidelines. Working with an independent broker can help you find the most favourable rates by matching you with insurers that are more lenient towards individuals with depression.

How to get life insurance with depression

Having depression or any other mental health condition can lead to higher life insurance premiums, but you can still get competitive rates with a consistent treatment history. Here are some tips on how to get life insurance with depression:

Be prepared to answer questions about your mental health

During the application process, be ready to answer questions about your mental health history, including your diagnosis, treatment, and any medications you are taking. It is important to be honest and disclose any relevant information, as lying or omitting information can be considered fraud and have serious consequences.

Shop around for different insurers

Different insurers consider mental health factors differently, so it is worth comparing quotes from multiple companies. Even if one company rejects your application, others may still approve it. An independent broker can help you find the right coverage option and walk you through the buying process.

Seek treatment for your depression

Following a consistent treatment plan can improve your chances of getting approved for life insurance at a better rate. Seeing a mental health professional and adhering to their treatment plan can demonstrate stability and reduce the insurer's perception of risk.

Consider guaranteed issue life insurance

If you have been turned down for traditional term or permanent life insurance, you may want to consider guaranteed issue life insurance. This type of policy does not require a medical exam or health questionnaire, and approval is guaranteed if you meet the age requirements. However, the death benefits are typically capped at a lower amount.

Understand how mental health impacts life insurance

Insurers consider mental health when determining eligibility and policy rates because it can affect your physical well-being and ability to complete daily tasks. Factors such as the severity of your diagnosis, treatment history, and recent hospitalizations will all be taken into account. Conditions with a higher likelihood of suicide, such as severe depression or anxiety, may result in higher premiums or even application denial.

Reasons for life insurance denial due to depression

While most insurers won't deny you life insurance coverage just because you have depression, it can be more difficult to qualify for traditional life insurance if you have a history of severe depression. Here are some reasons why you may be denied life insurance due to depression:

• Hospitalization due to depression: If you have been hospitalized due to severe depression in the last year, you may be denied life insurance coverage or charged higher premiums. This is because insurers consider hospitalization as a sign of higher insurance risk.
• Suicidal thoughts or attempts: A history of suicidal thoughts or attempts is a major red flag for insurers. They will thoroughly investigate any such incidents and may deny coverage if they deem the risk too high. The more time that has passed since the incident, the easier it may be to find coverage.
• Non-compliance with treatment: If you don't take prescribed medication correctly or refuse treatment, you may be denied life insurance. Insurers view non-compliance as a sign that your condition is not well-controlled, increasing their risk.
• Disability due to depression: If you are on disability leave or have missed work due to depression, you will be considered a higher-risk applicant. Insurers may deny coverage or charge higher premiums if they believe your condition impacts your ability to work and earn an income.
• Severe depression: If you have a severe case of depression, you may be denied life insurance. Insurers consider the severity of your condition, including the type of depression, the date of diagnosis, and any history of substance abuse.
• High-risk medications: The type and dosage of medication you take for depression can also affect your life insurance eligibility. If you have been taking high doses of antidepressants or multiple medications to treat chronic depression, insurers may view you as a higher-risk applicant.

Options for life insurance with depression

Life insurance companies take all health factors into consideration when determining eligibility and policy rates. This means that you can get a life insurance policy if you have been diagnosed with a mental health disorder such as depression. However, you may be charged a higher premium depending on the frequency, severity, treatment, and diagnosis details of the mental health condition.

Term Life Insurance

Term life insurance offers coverage for a set period, usually between 10 and 30 years. This type of coverage is generally cheaper than other types of life insurance, particularly if you are younger and generally healthy.

Permanent Life Insurance

Permanent life insurance is a type of life insurance that lasts your entire life as long as you pay the premiums. It is usually more expensive than term life insurance, so it might not be the best option for everyone. Permanent life insurance, such as whole life insurance or universal life insurance, offers a cash value component.

Guaranteed Issue Life Insurance

If you have been turned down for coverage previously, guaranteed issue life insurance might be one of the best options for those with mental health conditions. You don't need to complete any health questionnaires, and there is no medical exam. As long as you meet the age requirements (typically available to those aged 50 to 80), approval is guaranteed. However, the available death benefits are typically capped around $25,000. There is also often a waiting period of two years before your beneficiaries are eligible to receive the full death benefit.

Group Life Insurance

Group life insurance is offered by employers through the workplace. These policies are often inexpensive and easy to obtain and generally do not require any medical underwriting to qualify. While obtaining coverage is generally easier than with other policy types, the policy only remains active for as long as you maintain employment with your company.

No-Medical-Exam Life Insurance

Some insurance companies don't require medical exams automatically, even if you have a mental health condition. In these cases, you'd complete a health questionnaire online or over the phone instead. If your condition is mild with stable treatment, you can speak with a Policygenius expert to determine which no-exam life insurance options might be available for you.

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