Depression And Life Insurance: Eligibility And Exclusions

Mental health issues are common, with one in five adults in the US experiencing a mental health disorder each year, according to the National Alliance on Mental Health. But does this make them ineligible for life insurance? The short answer is no, but there are some things to be aware of when applying for life insurance with a mental health condition. Firstly, insurers are interested in any diagnoses that require medication or might affect daily life and the ability to work. Secondly, mental health conditions are considered a health risk and can therefore affect insurance premiums, with more severe diagnoses and inconsistent treatment records leading to higher costs. Thirdly, certain mental health conditions such as severe depression, bipolar disorder, or schizophrenia may increase costs or make it more difficult to qualify due to their link to suicide. Finally, it's important to be honest about your mental health on insurance applications, as lying can be considered fraud and lead to serious consequences.

How does depression affect 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, including mental health status. Mental health conditions are considered a health risk as they can affect physical well-being and one's ability to complete day-to-day tasks.

Depression can affect life insurance rates in several ways. Firstly, the type of depression and its severity will impact the rate. Mild cases of depression may qualify for preferred rates, while more severe cases may result in higher premiums. Life insurance companies typically categorise depression into three categories: mild, moderate, and severe. Mild depression is usually defined as up to one type of medication with no history of hospitalisations, while moderate depression may involve multiple medications and consultations with a psychiatrist. Severe depression often includes suicidal ideation or past suicide attempts.

Secondly, the frequency, treatment, and diagnosis details of depression will also impact the rate. Life insurance companies will want to know the date of diagnosis, the type of medications used (if any), hospitalisations related to the condition, and how symptoms are managed. A history of non-compliance with prescribed medications or refusal of treatment may result in higher rates or even denial of coverage.

Thirdly, the life insurance company's underwriting guidelines will play a role in determining the rate. Different companies underwrite medical conditions differently, so it is important to shop around or work with an independent broker to find the most favourable rates. Some carriers are more lenient with a depression diagnosis and will offer lower premiums.

Lastly, the presence of other mental health conditions or physical health issues can further influence the rate. Combinations of mental health issues are considered higher risk by insurance companies. Additionally, depression that is linked to physical health risks, such as cardiovascular disease, may result in higher rates.

It is important to note that while depression can affect life insurance rates, it does not automatically disqualify an individual from obtaining coverage. Most insurers welcome people with mental health conditions, especially after a medical exam and completion of a questionnaire about their medical history. However, in some cases, life insurance providers may deny coverage or postpone the application if the individual's health record is deemed too risky.

Can depression lead to a life insurance application being denied?

Depression can be a factor in life insurance applications being denied. However, it is not the sole reason and insurers take into account various other factors before making a decision.

Each insurance company decides what it considers a mental health issue, so each insurer's list of mental health conditions can vary. However, commonly recognised mental health issues include:

• ADHD (Attention Deficit Hyperactivity Disorder)
• Borderline personality disorder
• Dissociative disorders
• OCD (Obsessive-Compulsive Disorder)
• PTSD (Post-Traumatic Stress Disorder)
• Schizoaffective disorder

Insurance companies that accept customers with mental health issues want a clear picture of the applicant's situation. They will ask basic questions about mental health, such as how it affects daily life and the ability to work. They will also want to know how serious the condition is, how long the applicant has had it, and whether they are undergoing successful treatment.

Depression is a common mood disorder that affects how a person feels, thinks, and acts. Symptoms range from mild to severe. Life insurance companies consider depression a pre-existing health condition if it has been diagnosed by a medical professional prior to the application. They will also want to know the type of depression, the date of diagnosis, severity, history of substance abuse, medications used, and history of hospitalisation.

Yes, there are some cases where life insurance may be denied to someone with depression. This could be because the applicant has a history of suicidal thoughts or attempts, does not take prescribed medication correctly, or has refused treatment. However, the more time that has passed since such an incident, the easier it is to find coverage.

If denied traditional life insurance, there are still options available:

• Group life insurance – offered by employers, this type of insurance accepts all applicants regardless of pre-existing medical conditions.
• Guaranteed issue life insurance – available to most people within a certain age bracket regardless of health issues, but can be more expensive.
• Simplified issue life insurance – requires applicants to answer a few medical questions, with high premiums and limited coverage.
• Accidental death insurance – offers quick and easy coverage with a few questions and no medical exam, but only covers accidental deaths.

What information do insurance companies require from applicants with depression?

When applying for life insurance, applicants with depression will be asked to provide a range of information about their mental health. This is because insurance companies take all health factors into consideration when determining eligibility and policy rates.

The type and extent of information required will vary depending on the insurance company and the type of life insurance policy being applied for. Some policies, for example, will require a health questionnaire, while others will require a medical exam.

• When were you diagnosed with depression?
• What type of depression have you been diagnosed with?
• What is the severity of your diagnosis (mild, moderate, or severe)?
• Have you been hospitalized for depression in the last 12 months?
• Have you ever been treated/taken medication for depression?
• Have you ever been referred to a psychiatrist or another mental health professional?
• Do you have a history of substance abuse?
• Have you ever had suicidal thoughts or made a suicide attempt?
• Do you have a treatment plan, and are you following it?
• Have your symptoms improved or worsened recently?
• Do your symptoms affect your ability to perform daily tasks?
• Do you consume drugs or alcohol?

What are the best life insurance options for those with mental health conditions?

Mental health conditions do not make a person ineligible for life insurance, but they can lead to higher premiums. The best option for those with mental health conditions is to be honest about their condition and find a specialist provider if necessary.

Specialist providers

The UK-based mental health charity Mind lists several specialist insurance providers for people with pre-existing mental health conditions. These include:

• Aston Lark: Provides travel, life and home insurance for people with mental health problems and their families.
• Caspian Insurance: Finds life insurance for people with pre-existing medical conditions, including mental health problems.
• Curainsurance: Offers a variety of insurance services, including life, critical illness and income protection, for people with pre-existing medical conditions, including mental health problems.
• The Insurance Surgery: Finds life, travel and other types of insurance for people with pre-existing medical conditions, including mental health problems.

Non-specialist providers

Some non-specialist providers may also offer life insurance for people with mental health conditions. For example, Legal & General America offers competitive rates for people with a history of medical conditions, including anxiety and depression.

Types of insurance

There are several types of life insurance that may be suitable for people with mental health conditions:

• Term life insurance: This type of insurance offers coverage for a set period, usually between 10 and 30 years, and is generally cheaper than other types of life insurance.
• Permanent life insurance: This type of insurance lasts your entire life as long as you pay the premiums and usually includes a cash value component.
• Guaranteed issue life insurance: This type of insurance has guaranteed approval and no medical exam is required to qualify, but the available death benefits are typically capped at $25,000–$50,000, and it is often more expensive than other policies.
• Group life insurance: This type of insurance is offered by employers through the workplace and does not usually require any medical underwriting to qualify, but the policy only remains active for as long as you are employed by the company.

How can a broker help someone with depression find life insurance?

A licensed life insurance broker can help someone with depression find life insurance in several ways. Firstly, they can help navigate the application process, which can be complex and require detailed information about mental health history. This includes questions about diagnosis, treatment, medication, hospitalisations, and impact on daily life. A broker can guide their client through these questions, ensuring full transparency and accurate disclosure of relevant information.

Secondly, a broker can shop around for the best policies and rates on their client's behalf. They have access to a wide range of insurance policies from different companies and can compare them to find the most suitable options. This is beneficial as different insurers weigh mental health risks differently, and some may be more accommodating than others. A broker can also advise on the different types of life insurance available, such as term life insurance, whole life insurance, and guaranteed issue life insurance, and help their client choose the most appropriate option based on their needs and circumstances.

Thirdly, a broker can provide valuable expertise and advice. They can explain how mental health history impacts life insurance eligibility and premiums, and help their client understand the underwriting process. They can also offer guidance on improving the chances of approval and securing more favourable rates, such as demonstrating consistent treatment, effective symptom management, and stable employment.

Lastly, a broker can act as an advocate for their client, helping them navigate the complex landscape of life insurance while ensuring their best interests are represented. They can provide support and assistance throughout the entire process, from choosing a policy to completing the application, and even during the medical exam if required. By working closely with their client, a broker can help them find life insurance that meets their needs, even with a history of depression.

Frequently asked questions