Income protection for mental health

Income protection can cover mental health, but you'll usually need medical proof. Compare your options.

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Income protection can cover mental health if you need to take a break from work. However, you'll need medical proof that mental illness is the cause. We've put together a list of providers that will can cover mental health below.

Mental health income protection: speak to an insurer or adviser

Name Product Minimum Hours Eligibility Maximum % of Income Covered Maximum Monthly Benefit Apply
AAMI Income Protection
Suncorp Income Protection
Insuranceline Income Protection

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Can income protection cover mental health?

Income protection will cover you for a short period of time if you have to stop work temporarily due to mental illness. However, you'll need medical proof that mental illness is the cause. This may vary between insurers and some will even you require confirmation from an approved doctor. Some income protection insurance policies may exclude mental illness altogether, so be sure to check.

Guide to income protection claims

How does mental health affect your premiums?

Your premiums are affected by the perceived risk you pose to make a claim. Those with high risk factors such as those who have an existing mental health issue, are viewed by insurers as more likely to make a claim and thus are subjected to higher premiums. Every insurer is different but you can expect your premiums to be affected in one of the following ways:

  • Cover you at no extra cost:They may decide that your mental health does not pose an added risk and cover you at no extra cost. You are more likely to get this if you can demonstrate that your condition is being managed and that you haven’t had any recent issues.
  • Cover you at extra cost: If your insurer feels that your condition represents an increased level of risk, but not an unreasonable one, they may offer cover but at an additional cost
  • Cover you with exclusions: Your insurer might offer you cover at no extra cost, but specifically without cover for certain mental health conditions. This may be their course of action if you have a pre-existing condition, or if you sought treatment or had a mental health episode several years ago but not recently. Sometimes benefits may be limited, for example, lower payouts or shorter maximum benefit periods for mental health claims.
  • Deny you cover: Sometimes insurers can decline to cover people they feel are too risky. If they feel that your condition will almost certainly result in a claim or extra costs, they may be more likely to opt for this.

From a legal perspective, insurers must have reasonable and relevant information to back up their decision. You are also required to disclose this information.

Key steps to take if you're looking for cover

  • Go through the policy document. As with buying any financial you need to understand the what you're getting into and the best way to do this is to read through the policy disclosure statement (PDS). This document will contain information about how your insurer defines mental illness, if there are any exemptions or exclusions and whether or not you'll be slugged with an additional premium.
  • If in doubt speak with someone. Because of the confusing nature of insurance products, it's always best to speak with someone in the know. If you're having trouble understanding where an insurer stands when it comes to mental illness, jump on the phone or online and get in touch with a financial adviser, a adviser or the insurer.
  • Get specific definitions. If you do end up contacting your insurer ask them specifically how mental illness is defined. Some insurers use mental illness as a blanket term that covers everything from bi-polar to stress disorders and sleeping problems.
  • Ask if it's covered as a pre-existing condition. While some insurers will cover you if you have an existing mental illness others will only provide you with cover
  • Check the fine print. If you have cover through your super and you change providers, make sure you check the conditions related to mental illness as they differ between funds.
  • Ask about waiting periods. Some policies may have waiting or non-claims periods for a specified amount of time. Make sure you know what these are before you apply for cover.

Will I need to disclose my mental illness?

You are required to disclose mental health issues the same as you would any other condition. Your duty of disclosure is a legal obligation. You are required to inform your insurer of anything that may impact the type of insurance policy or level of cover you receive. In short, you must fill out all application forms accurately and answer all questions honestly.

Disclosure can help your insurer tailor your cover

Remember, your insurer cannot provide effective cover if it doesn’t know your needs, and it’s generally advisable to provide as much information as possible. Insurers are more likely to deny the claim of someone who does not disclose their full medical history in their application than someone who is open about both their condition and the steps they are taking to manage it.

What happens if you don't disclose everything?

If a customer fails in their duty of disclosure, the insurer reserves the right to cancel their policy without refund, or refuse to pay a claim.

What if I experienced mental health in the past issues but no longer do?

If you have previously experienced or sought treatment for a mental health issue, then it is likely to qualify as a pre-existing condition and the insurer may impose additional loadings or exclusions, or it may decide that the condition poses little risk and will cover you as normal.

A mental health issue could be identified as a pre-existing condition if it meets one or more of the following criteria:

  • A doctor or relevant medical specialist diagnosed it at a prior date
  • You have experienced prior symptoms that would cause a reasonable person to seek treatment
  • It’s identified as the symptom of a genetic condition present from birth
  • You are currently taking medication for the purposes of managing the condition

These criteria may be interpreted differently depending on the insurer and the policy. Check the exclusions and pre-existing conditions sections of your policy’s product disclosure statement (PDS) for more details.

How insurers work with pre-existing conditions

Jason was looking for life insurance but was finding it difficult to get cover because of an incident several years ago where he had experienced a period of severe anxiety and depression but never sought treatment. To find cover, he started looking at how different insurers defined pre-existing conditions.

The first insurer’s PDS defined having a pre-existing condition as “previously experiencing symptoms that would have caused a reasonable person to seek treatment”. Under this definition, Jason’s former anxiety and depression would count as a pre-existing condition.

The second insurer’s PDS defined pre-existing conditions as ones that were “previously diagnosed by a relevant medical specialist”. Under this definition, Jason’s anxiety and depressing would not count as a pre-existing condition.

Realising that he might be able to get lower premiums with the second insurance company, Jason got a quote to compare alongside other options.

What are my options if I'm rejected for cover?

If you're refused cover, you can contact the Australian Financial Complaints Authority (AFCA) as they handle complaints about insurers that refuse to provide general insurance. However, you can only contact FOS after you have gone through the insurers dispute resolution process.

If you believe an insurer treated yo in a discriminatory fashion because of your mental illness, there are options available to you including:

  • Contacting the insurers chief underwriters and explaining to them your issue
  • Contacting your insurers internal dispute resolution team
  • Getting in touch with the Mental Health Council of Australia (MHCA)
  • Sending your complaint through to FOS

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FAQs about mental health income protection

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