Life insurance and mental illness

What you need to know about getting life insurance if you suffer from a mental illness.

Roughly half the population will suffer form a mental health issue at some point in their life and yet it is still an area of conjecture when it comes to insurance. While the industry has come a ways in recent years when it comes to how they assess those with mental health concerns, there is still room for improvement.

How does mental illness 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:

  • Premium loadings. A premium loading is an additional fee affixed to your insurance premium that either remains flat or increases with each year you have cover.
  • A reduced term. Some insurers may offer you a shorter maximum term than they would normally cover.

What you need to do when looking for life insurance

  • 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.

Mental illness is a leading cause of burden of disease

Two disease groups accounted for almost half of the non-fatal of burden of disease in a recent Australian Burden of Disease Study: Impact and causes of illness and death in Australia, mental health and and musculoskeletal conditions.

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

If you're refused cover, you can contact the Financial Ombudsman Service (FOS) 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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Australian counselling services for people suffering from mental health issues

  • Beyondblue. Beyondblue provides people with 24 hour a day information and support for a range of mental health issues.
    Phone: 1300 224 636 Website:
  • Mental Health Australia. Mental Health Australia an organisation that strives to affect reform in Australia by providing people with a better understanding of the effects of mental illness.
    Phone: (02) 6285 3100 Website:
  • MindHealthConnect. MindHealthConnect is a mental health resource that provides users with information about mental health issues and online programs.
  • Mental Health Council of Australia. Mental Health Council of Australia is an independent body that provides people who have suffered discrimination because of their mental illness with an avenue for recourse.
  • SANE Australia. SANE is a charity designed to help young people who have been affected by mental illness.
  • ReachOut Pro. ReachOut Pro provides information about mental health.
  • Black Dog Institute. Black Dog Institute provides information about bipolar disorder and depression.
  • BlueBoard. BlueBoard is an online support group for people are suffering from or those whose lives have been impacted by a range of mental health disorders.
  • e-couch. e-couch is a self-help interactive mental health program.
  • Headspace. Headspace provides young people specifically with advice, information and support about health with mental health problems.
  • Mental health online. Mental health online offers information about anxiety issues, auto-psychological assessment that are free of charge and treatment programs.
  • MoodGYM. MoodGYM provides behavioural therapy through an interactive program.
  • Partners In Depression. Partners In Depression offers support and info to those who are helping someone who is currently experiencing a mental health issue.

Richard Laycock

Richard is the senior insurance writer at and is on a mission to make insurance easier to understand.

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