Will My Mental Health Affect My Life Insurance?
It probably will, depending upon your condition. According to the U.S. government, about 19% of American adults suffered from a mental health condition in 2018.
Because insurance companies write policies according to the risk they will have to pay on the policy eventually, your mental health, if it may make you more likely to die within the policy term, could raise premiums. It could even render you ineligible for most types of life insurance coverage.
Every case is different. Read on to find out how common mental health conditions may affect your ability to get life insurance, the type of life insurance you will be eligible for, and the premiums you will pay.
How Do Insurance Companies Issue Policies and Determine Premiums?
Someone seeking to purchase life insurance will complete an initial application and medical questionnaire. An insurance underwriter will consider that information when deciding whether to issue a policy and what the premiums will be. The following factors are used to determine an applicant’s “risk”:
- Age
- Height
- Weight
- Medical History
- Lifestyle
- Habits
An applicant will be placed into one of the four following categories according to the information disclosed on the initial application and medical questionnaire:
- Preferred Plus (also called Super Preferred)
- Preferred
- Regular (also called Standard)
- Substandard
Just as the terms sound, a Preferred Plus applicant will pay less in premiums for the same coverage than a Preferred applicant. A Regular applicant will pay more in premiums for the same coverage than a Preferred applicant. A Substandard applicant may not be offered coverage at all.
What is Mental Illness?
The term “mental illness” is used to describe a broad range of conditions that affect a person’s thoughts and behaviors. Mental illnesses include:
- Dementia
- Bipolar disorder or manic depression
- Schizophrenia
- Clinical depression
- Chronic Anxiety
- Attention-deficit disorder
How Does Mental Illness Affect My Rating?
Your mental health condition may not affect your rating much, considering how severe your condition is and other factors, but it may preclude obtaining life insurance coverage altogether if the mental illness is serious and there are other negative factors in what you disclosed about your medical history, lifestyle, and habits.
When the underwriter sees that you have disclosed a mental illness on your initial application and medical questionnaire, he or she may require you to answer additional questions or undergo a medical exam. The insurance company will also run a prescription search on you to determine the severity of the illness and whether you still suffer from it.
Factors that may make you look like more of a risk to insure include:
- You have prescriptions for multiple medications to treat your mental illness;
- You have been hospitalized or institutionalized due to your mental illness;
- You have habits related to mental illness such as drug or alcohol abuse or addiction;
- You have a history of attempting suicide.
Every application differs, so the underwriter will look at whether a suicide attempt was a one-off, whether your condition is under control with medication and has been for some time, and whether a period of institutionalization was many years ago. In these cases, you may be seen as less of a risk to insure, and you may be able to obtain coverage at Regular or even Preferred rates.
However, if your medical history shows that you have recent or multiple suicide attempts or hospitalizations, or criminal charges due to drug abuse, this may preclude obtaining life insurance coverage or only make life insurance coverage available at exorbitant Substandard rates.
What Do I Do if I Can’t Get a Life Insurance Policy Due to My Mental Illness?
There are alternatives to traditional or standard life insurance policies available that you may be eligible for:
Guaranteed Issue Life Insurance
A Guaranteed Issue policy is what it sounds like – regardless of your health, you will be issued a policy. You will not be asked any medical questions.
Unfortunately, the premiums for Guaranteed Issue policies are often much higher than those of standard or traditional life insurance policies, and the amount of coverage is quite a bit less, topping out at $50,000.
Most applicants for Guaranteed Issue Life Insurance are looking to pay for end of life and funeral expenses, and take out $10,000 or $15,000 in coverage for that purpose.
Simplified Issue Life Insurance
Simplified life insurance is a type of insurance that does not require a medical exam, only an application with minimal health questions. These policies can go into effect much more quickly than a standard policy, which can take anywhere from four to eight weeks to go into effect.
The death benefit can be much higher than a Guaranteed Life policy, ranging from $5,000 to over $100,000. Again, the premiums will be higher than a standard life insurance policy.
Group Life Insurance Through Work
If you are employed and your employer offers group life insurance as a benefit of employment, you may be eligible for that. Generally these policies are limited to the amount you would make in a year, but the premiums will be much more affordable than either Guaranteed Life or Simplified Life policies, if not free to you and paid for entirely by your employer.
What Should I Do if I Need Life Insurance and Have a Mental Health Condition?
You should do what you can to appear as low-risk as possible. You can’t change the fact that you have a mental health condition, but you can show that you have taken steps to remediate it and that remediation is successful.
If you are between medications or are on a new medication, you may want to wait until that new medication is proven before applying for life insurance. If you’ve had recent hospitalizations or suicide attempts, you may want to wait awhile before applying so that you can show a period of stability and control over your condition.
If you are initially denied life insurance because of your mental health condition, discuss your case with the underwriter. He or she can explain why your application was denied and suggest ways in which you can improve your chances of getting approved when you reapply in the future.
Under no circumstances attempt to hide your mental health condition from the insurance company. It is unlikely you will be successful, but if you are and you die within the term of the policy, your beneficiary’s claim for death benefits will very likely be denied due to your misrepresentation. That would undo all of the good you intended to do by taking out the policy and paying premiums.
About the Author
Veronica Baxter is a blogger and legal assistant living and working in the great city of Philadelphia. She frequently works with Chad Boonswang, Esq., a Philadelphia life insurance beneficiary lawyer.