Mental health issues – will I be refused Life Insurance?
If, once you’ve read this case study, you’d like to talk through your situation, please call 0800 644 4468 – Monday to Thursday from 09.00 to 19.00 and on Friday between 09.00 and 17.00.
When a client has a pre-existing condition, or has suffered a serious illness in the past, the first thing we do is pick up the phone. We speak to Underwriters at many of the UK’s leading Insurance companies. Discussing all of our client’s medical history helps us to identify the best company to apply to. This also means we avoid applying to companies who will end up being too expensive or worse, decline an application. By being upfront and detailed, we are able to obtain the best terms possible for our clients.
Case Study – Are People with Mental Illness Refused Insurance?
We were contacted by a lady last year who asked us to help her arrange some life insurance cover. She already had a policy in place, but required life insurance over a longer period of time (an existing policy cannot simply be extended).
An application was submitted and was initially accepted on standard terms. However during our conversation, she told us that her 24 year son had died unexpectedly two months earlier. Our client was signed off work with what she thought was Compassionate Leave and although she had visited her GP to arrange grief counselling, she was not on any medication. We asked her to check her medically records to ensure that there was nothing else which would affect her life insurance. We are always very careful to ensure our clients fully disclose their medical history. Non-disclosure of important medical information or family history could result in a claim not being paid.
When she contacted her GP, he told her that the medical records showed she was off work due to depression. We contacted the new Insurer to advise them about this additional information. As a result, the insurer decided to increase the premium by an additional 50%.
We then decided to check what other insurers might do. They also confirmed that they would also increase the premium to the time she has taken off work due to depression.
Under the circumstances, we advised the client to refuse the insurers offer and to keep her existing policy in place until she has been back at work for at least a year. We will then be able to help her to re-apply for life insurance and obtain standard terms (no increase on top of the basic premium due to the history of depression).
An Insurance company’s Perspective
Mental Health can affect the underwriting of a life insurance application more so than a critical illness application.
There is only one insurer who covers mental illness as a critical illness and they only added it to the conditions they cover late in 2017. A claim for Mental Illness could be covered under ‘Total and Permanent Disability’ but only if the client has been medically advised that they will never be able to work again due to mental illness; this is notoriously difficult to prove.
Some, but not all, Insurance Providers exclude a life insurance claim as the result of suicide in the first 12 months of the policy (they will cover it after the first 12 months). There are however several insurers who will cover suicide from day 1 of the cover being in place.
The loading (increase on top of the basic / standard premium) usually reflects a more recent event and whether the client has had to have time off work. Clients with long standing and severe mental health problems can also struggle to secure life insurance cover.
Different Insurance Providers make different underwriting decisions, which is why it is essential to use a Specialist Adviser to obtain the best terms available. Our client mentioned above will secure cover on standard terms after 1 year with some providers but others will make her wait for two years.
Insurance Providers will always provide the reason for declining a policy, either by informing the client directly, their adviser (subject to data protection rules), or by writing to the GP and advising the client to discuss it with their doctor.
It is worth noting that life insurance is not a ‘right’ available to all applicants. The insurance company considers any potential risk factors before providing a decision; this is exactly the same any other type of insurance. After all, most people would expect a teenager to pay higher rate car insurance than a 50 year old with an exemplary driving record. The alternative would be for all car drivers to pay higher rate car insurance to ensure high risk drivers are not ‘penalised’ but paying more.
Whilst you are welcome to get a quote on-line we would recommend you talk to one of our advisers.
Any quote that your adviser provides you with will take into account to your circumstances, your medical history, as well as your budget!
An on-line quote is just that – a quote – it isn’t a definite offer of cover. What really matters is the premium you are offered, after your application has been assessed.
Call Freephone 0800 644 4468 – Monday to Thursday from 09.00 to 19.00 and on Friday between 09.00 and 17.00.