Mental illness affects 1 in 5 Canadians in their lifetime1. Recently, a Canadian Mental Health Association poll indicated that 24 percent of respondents have sought help for mental health challenges (that is 1 in 4 Canadians), this is up compared to polls completed over the past two years 2. So, it is no surprise a question that we receive from clients is “What is the impact of having sought/declared mental health help on your life insurance application?”
In my experience it is not very common for someone with a history of mental health to be declined for life insurance, especially if they are stable and compliant with their treatment plan. However, every case is different and sometimes a different decision may be warranted
Underwriters look at your personal health history, family health history, BMI, smoking status, and other factors. Depression, anxiety and other mental illness are like any other illness in the process.
There are a lot of different factors that come into play during underwriting. Carriers will be looking at things such as:
- Age of diagnosis and duration of stability
- Has the condition been improving or worsening
- Drug/alcohol consumption
- Severity and if there were any hospitalizations or ER visits
- Number of events or occurrences
- Suicidal thoughts or attempts
- Limitations to daily activities or time off work
Here are some causes for a decline:
- Someone was hospitalized due to depression and/or having suicidal thoughts.
- Someone just had a recent diagnosis or put onto a new treatment plan, a carrier may want to postpone their decision for a few months to see how things progress.
- Someone has another illness which is causing depression.
- Someone was off work at time of application due to mental health.
When someone has a history of mental health, the carrier may request a questionnaire to be completed in order to provide additional details that wouldn’t be captured in a normal application. Depending on the above, an insurance carrier may decide to “rate” the insured. This means that they will charge an additional premium to offset the risk. The rating will depend on the carrier’s risk tolerance and the client’s medical history.
It is important to note that disclosing any mental health issue in your application will prevent the risk of invalidating your insurance policy. It can sometimes be intimidating to individuals to divulge this information; however, it is critical to do so. You would not want your beneficiaries to lose out on a payout when it may be needed the most.
If someone has a moderate to severe history of mental health, it’s good to work with a broker who understands the underwriting process and can help you shop the market. Some carriers may provide a better decision than others – and a good broker can identify which carriers will view one’s history of mental health most favourably before submitting a client’s application.
Keep in mind, this is for Life Insurance. Disability Insurance can be a bit trickier when it comes to underwriting and one should always expect an exclusion for mental health if they have history of needing any type of counselling or treatment in the past several years. This is one example why it’s so important to obtain coverage before any type of health concern arises.