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Depression and Life Insurance

Do Life Insurance Companies Cover Depression?

Key Facts

  • Applicants who have had mild depression and have fully recovered for at least 1-2 years can expect standard premium rates.
  • A loading may apply for serious or ongoing cases of depression.

Depression affects 45% of the Australian population at some stage of their life (beyondblue.com.au, 2015) can be categorised between mild and severe. It is still possible to take out life insurance in Australia if you suffer from depression. Applicant's will be required to provide details of their condition at the time of application which may include;

  • Nature of condition
  • Symptoms
  • Period that symptoms have been experienced
  • Any medication prescribed
  • Other treatment
  • Any impact on daily activities

How mental illness is treated by insurance companies varies extensively between insurance providers in terms of when a benefit will/won't be paid and whether or not cover will be provided. It can be worth speaking with an insurance consultant to help you a suitable cover option.

Australian Counselling Services for People Suffering from Mental Illness/Depression

  • Lifeline - Lifeline.org.au - Phone: 13 11 14
  • Mensline - Menslineaus.org.au - Phone: 1300 78 99 78
  • BeyondBlue - BeyondBlue.org.au - Phone: 1300 22 4636

What type of questions might be asked by my insurer?

  • What are your symptoms of depression?
  • Is there the presence of other mental health conditions other than depression?
  • What could be the cause of the depression symptoms?
  • When did you first experience symptoms and did they happen as a result of something specific?
  • Have depression symptoms forced you take time off work or impacted your ability to perform work duties? Did you have to take less hours or sick leave as a result?
  • Have depression symptoms affected your relationships with family or friends or reduced your ability socialise, eat, sleep or engage in physical activities?
  • How many episodes of depression do you experience and how long do they typically last?
  • Have you received treatment for this condition? If so, what type of treatment was given including counseling, medication or hospitalisation. What is the dosage of any medications taken for depression?
  • If applicable, what is the name of the doctor, therapist or psychologist you have visited. Provide contact information.
  • Are you still receiving treatment, and if not, what was the last date of treatment?
  • Have you been hospitalised as a result of depression or depression symptoms?
  • Have you contemplated or attempted suicide?
  • Is there a history of depression in your family?

Discrimination against depression

Studies have shown that people who are suffering from depression still have a hard time getting insurance cover for their illness. There is still discrimination among insurance providers regarding people who have depression stating the reason that, depression is easy to fake and that insurers are not prepared to give cover for it.

A lot of insurance providers still generalise depression and puts it in the same category as schizophrenia. Even if the person had been treated from depression years ago or is suffering from mild depression, there is not distinction made leading to ineligibility for an insurance application. Worse, those who have life insurance often find themselves having difficulty during the claim process as they later found out that it is excluded in their cover. This reality was revealed in a recent survey made by Mental Health Council of Australia showing that out of the 500 respondents suffering from depression, 45% were denied income protection and 35% were denied life insurance cover.

In order to address this issue of discrimination, the Health Council together with other medical organisations made a Memorandum of Understanding to improve the underwriting and claim process for depression and anxiety. The memorandum also includes provisions concerning the close monitoring of complaints concerning this discrimination.

How is depression assessed by insurance companies?

Because of the vigilance of organisations like the Mental Health Council of Australia, a lot of progress has been made and people suffering from depression and anxiety can now find life insurance cover despite their illness. Underwriters, wanting to lessen the risk as much as possible, will give you a standard-plus or preferred rating based on the following underwriting standard or basis for those with mental illness.

Taking out insurance if you have a history of depression requires:

  • Control – If you are suffering from or diagnosed with depression, insurance providers want to have as much information how you are being treated and monitored by your physician. It includes the medication you are taking and in what stage of treatment you are in at the moment of application. They would also want to know whether you are following your doctor’s prescription to keep the depression under control.
  • Compliance – Insurance providers are also concerned if you are complying with your doctor’s schedule for follow-through, how much dosage you are taking and how often you are taking the medication. Therefore, if you are thinking of getting life insurance and you have depression, follow your doctor’s orders.
  • Complete medical record – Whether or not you are suffering from depression or another illness, your insurance provider will still request your medical records for reference. It is also important that you disclose any medical history that might have an impact on your insurance policy. Failure to disclose such details might lead to your ineligibility during claim time. On the other hand, giving as much necessary information as possible gives the impression that your depression is under control. It will also be easier for your underwriter to give you a preferred rating and find a policy that will suit your need.

If you are not given a standard rating during the underwriting process, it is your right to be given an explanation of the decision. On the other hand, once eligible for life insurance cover, insurance providers will generally draw up different life insurance terms for you based on their company policy. Some of the possible terms you can get are shorter insurance contract term, a much higher premium than the average policy, exclusion to some activities, or you will be given an alternative option.

If you are not happy with the insurance provider’s ratings and decision, you can ask for a complete explanation of the decision or seek the insurance cover from another company. That is why it is very important to shop around first in order to find a good deal regarding your situation. As insurance regulations improve, it is becoming much easier to find insurance providers who specialise in such cases and will be more than willing to provide cover for you.
Getting cover for depression is possible nowadays. However, you still need to comply with some requirements. If you are following your doctor’s medication, there is no cause for worry. Moreover, as more and more insurance providers join in the industry, competition grows so does your opportunity to find cover despite your history of depression.

Compare options from these direct brands

If you disclose your condition upfront these brands will be able to confirm whether or not you are covered:

Name Product Maximum cover Maximum Entry Age Minimum Sum Insured Guaranteed Future Insurability Expiry Age Short Description
Cover for pre-existing conditions are assessed on a case by case basis during the application process. You may be subject to an increase in premiums or a specific exclusion.
Cover for pre-existing conditions are assessed on a case by case basis. You may need to speak to the underwriter over the phone. Make sure you select the 'Tailored' option on site.

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Maurice Thach

An insurance researcher and writer for finder.com.au who loves finding an answer to the question "Am I covered for ________?" Maurice has also completed a Tier 1 Life Insurance and a Tier 2 General Insurance Certification under ASIC's Regulatory Guide 146. This means he can confidently provide general advice for life insurance and non-life insurance products.

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