Can you still get life insurance living with a mental illness diagnosis?

Living with depression or an anxiety disorder shouldn’t stop you from getting your life insurances sorted.

As if living with a mental illness, like anxiety or depression, wasn’t difficult enough - getting your life insurance sorted when you're living with these conditions can seem overwhelming too.

Thankfully good mental health is now becoming part of the regular conversations for many Australians.

Here are tips to help navigate the application process.

• About 3 million Australians are living with a form of anxiety or depression (Beyond Blue, 2020) and at least 45 per cent of Australians will experience a mental health issue at some point in their lives. (SANE, 2019)

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Here's the question we get asked a lot

• "If you have a past or current mental health condition, you might be wondering how this might affect your ability to set up a safety net for yourself or your family using life insurance?"

The good news is, if you have a history of mental health issues, it doesn’t need to automatically stop you from getting your life insurances sorted.

• In fact when you have the right information and the right specialty financial adviser on your side, you may be still able to get your life insurances sorted.
• Just be prepared to provide more detailed background to your specialist financial adviser so we can help the insurer better understand your individual situation, so they can provide an individual assessment.

There’s no doubt attitudes towards mental health issues are slowly changing for the better and many Australians now feel more comfortable discussing this topic than they did just five years ago. Community awareness days like RUOK Day are all helping move our community in the right direction.

No two peoples' stories are the same

The challenge for many old fashion life insurance companies, taking a one-size-fits-all approach to understanding mental health is not helpful.

• Some people who do not have a mental health condition are finding themselves assessed by insurance companies as if they do,
• while others with well managed conditions tell us ‘they feel their personal circumstances are being ignored’ as they find themselves in the too-hard-to-insure-basket, with nowhere else to turn.

Why is Mental Health a big issue for Australian life insurance companies?

As with all pre-existing conditions, the chance of possible future effects and their severity are hard to predict.

Economically speaking, the financial impact of mental health conditions can be very expensive.

• In 2019, Life insurers paid $1.24 Billion¹ (yes that's not a typo, the word is ‘Billion’) in claims payments to more than 9,500 Australian's for mental health claims.
• When it comes to Income Protection insurances, Mental Health can sometimes be hard to manage when a person is returning to work.
• When it comes to Crisis/Traumas Recover insurance and Life insurance, this is less of an issue.

Getting used to the new normal (whatever that is now) and our heightened anxiety and the 24 hour news cycle

In a world of growing incidents of domestic terrorism, a relentless 24 hours news cycle that recycles images and messages of trauma again and again (with seemingly little regard to the viewers but only advertisers who pay for the recycling of calamity), our stress levels seem to be on constant alert, whether needed or not.

Where do we start?

1.  First lets get some clarity on what the diagnosis is

Depending upon whether a person is living with a reactive grief event or with a professional diagnosis of depression or anxiety, (or something else) - getting clear on what, why and how to best manage the issue is an important part of getting your story understood by an insurance company.

• Grief and Depression might look initially similar, but they can often have very different triggers.
• Depression and Anxiety can be two different conditions.

2.  Understanding grief and depression may be different

Some reactive grief based events can understandably leave us all feeling the mental impact of a sudden, (often surprising) and strained emotional response. Whether that's the sudden death of a parent, an injury to a child, or the loss of siblings or friends - it all takes a toll on us in many different ways.

Whatever may be in your life, understanding your triggers, appreciating their effects and working with the correct diagnoses is very important to getting the best chance at getting your life insurances sorted.

3.  Know what you can expect to be asked about mental health during a life insurance application

Here are some seven sample questions you will need to be prepared to answer during a life insurance application.

1. Have you ever taken (or been prescribed) any medication for your mental health condition and if so, what are the names and dosage?
2. Are you still taking it and was it prescribed more than once?
3. Have you ever been recommended to talk-based therapy such as counseling, CBT or referred to a psychiatrist?
4. Have you ever been in hospital for your mental health condition?
5. Have other associated health conditions related to mental illness, such as a history of drug or alcohol misuse?
6. Have you ever taken time off work as a direct result of your mental health condition?
7. Have you ever tried to complete suicide?

Why is it important to disclose your mental health?

Applying for any Life insurances is part of a good faith application with a legal Duty of Disclosure. This means under the duty of disclosure, a person applying for insurance must disclose all relevant information to the insurer before a contract is entered into.

Failure to fully disclose can allow insurers to not only deny a claim but also to “avoid” the insurance cover, as if it never existed. This means an insurer could refuse to cover any claim under the insurance policy, even if it’s completely unrelated to the matter that was not disclosed.

Pro Tip: Some insurance applications have time limited questions and may ask about a medical history from the past 5 years only, so make sure you understand the question (and timeline) being asked about.

Take all applications for life insurance seriously and only work with a professional financial adviser who can understand your personal circumstances and accurately work with the applications Underwriter.

Time for some good news

The good news is there are a few modern life insurance companies who are now more interested in understanding an individual's personal situation to see what level and type of insurance cover they can provide.

• Sometimes it's straightforward, as long as we have access to detailed information ahead of time.
• Sometimes it may result in an increase in premiums to cover an increased risk, and
• Sometimes cover might be deferred until particular symptoms have reduced or medication are no longer needed.

Either way, we work with all our clients to get clarity on their individual options and if we need to wait, we’ll wait together with you until the right time.

The important messages is Take Action Today.

Life and circumstances always change, hopefully for the better but not always.

While it's impossible to provide a one-answer-fits-all-insurance-companies statement here - the important message is this:

Don't ignore an opportunity to get your insurance sorted today,
just because you don't yet know all your options.

Give us a call and we can do a confidential pre assessment for you to test the water, before we both jump in together.

Drew Browne is a specialty Financial Risk Advisor working with Small Business Owners & their Families, Dual Income Professional Couples, and diverse families. He's an award-winning writer, speaker, financial adviser and business strategy mentor. His business Sapience Financial Group is committed to using business solutions for good in the community. In 2015 he was certified as a B Corp., and in 2017 was recognised in the inaugural Australian National Businesses of Tomorrow Awards. Today he advises Small Business Owners and their families, on how to protect themselves, from their businesses.  He writes for successful Small Business Owners and Industry publications. You can read his Modern Small Business Leadership Blog here. You can connect with him on LinkedIn.  Any information provided is general advice only and we have not considered your personal circumstances. Before making any decision on the basis of this advice you should consider if the advice is appropriate for you based on your particular circumstance.

_{[1] FSC-KPMG life insurance claims data based upon all income protection mental health claims where the person received a payment during 2014-2018.}