Will you be covered for life insurance if you have a mental health illness?

Published on November 30th, 2020
  Written by 
Bill Tsouvalas
Bill Tsouvalas is the managing director and a key company spokesperson at Savvy. As a personal finance expert, he often shares his insights on a range of topics, being featured on leading news outlets including News Corp publications such as the Daily Telegraph and Herald Sun, Fairfax Media publications such as the Australian Financial Review, the Seven Network and more. Bill has over 15 years of experience working in the finance industry and founded Savvy in 2010 with a vision to provide affordable and accessible finance options to all Australians. He has built Savvy from a small asset finance brokerage into a financial comparison website which now attracts close to 2 million Aussies per year and was included in the BRW’s Fast 100 in 2015 as one of the fastest-growing companies in the country. He’s passionate about helping Australians make financially savvy decisions and reviews content across the brand to ensure its accuracy. You can follow Bill on LinkedIn.
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The short of it is that you can get adequate life insurance coverage even if you have a mental illness. The long end of it is that your insurer will need some medical information.

What is the Australian makeup when it comes to mental illness

There are various forms of mental illnesses that a person can suffer from such as depression, anxiety and substance disorder which doesn’t pop up once but is a reoccurring problem in someone’s life. Some people can develop two forms of mental illnesses at the same time which can hinder their productivity in life. Almost 45% of Australians will experience a mental illness in their lifetime.

How will this affect your life insurance

Life insurance is there to make sure that your loved ones continue their lifestyle even when you are no longer around. Your insurer will need to assess your medical history to assess your eligibility and that you get the most suitable cover.

Your application will be initially assessed at standard rates without loadings or exclusion if you are still undergoing treatment for any mental illness. Insurers look at the history of the illness in your family and other past medical conditions to determine the term of your cover. This is a process that everyone must undergo.

It’s not a one glove fits all process, meaning that insurers evaluate applications on a case-by-case bases. Therefore, premiums will differ depending on the history and severity of your case.

Discrimination is a real thing but shouldn’t deter you from applying

Despite the improvement of information and knowledge surrounding mental health issues, applicants could still face discrimination from insurers. Studies have shown that people who suffer from depression could have a hard time when applying due to some insurers claiming that it is something that can be faked.

A survey released by Mental Health Council of Australia revealed that out of 500 respondents suffering from depression, 45% were denied income protection and 35% did not get life insurance cover. There have been various moves and coalitions formed between health councils and insurance companies to help better the understanding of mental illness.

These are aimed at improving the underwriting and claim process for people who suffer mental health illnesses.

If your application has been denied or has not been given a standard rating during the underwriting process you have the right to have the decision explained in writing. It is important that you shop around and compare so that you can move onto another company that will get your need for life insurance.

You can get life insurance no matter what mental illness you have, so long as you follow the doctor’s orders by complying with the medication that’s given there shouldn’t be a reason why you can’t be covered.

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This guide provides general information and does not consider your individual needs, finances or objectives. We do not make any recommendation or suggestion about which product is best for you based on your specific situation and we do not compare all companies in the market, or all products offered by all companies. It’s always important to consider whether professional financial, legal or taxation advice is appropriate for you before choosing or purchasing a financial product.

The content on our website is produced by experts in the field of finance and reviewed as part of our editorial guidelines. We endeavour to keep all information across our site updated with accurate information.

Savvy is partnered with Compare Club Australia Pty Ltd (AFS representative number 001279036) of Alternative Media Pty Ltd (AFS License number 486326) to provide readers with a variety of life insurance policies to compare. Savvy earns a commission from Compare Club each time a customer buys a life insurance policy via our website. We don’t arrange for products to be purchased from these brands directly, as all purchases are conducted via Compare Club.

Savvy does not compare all life insurance policies or providers currently operating in the market. Any advice presented above or on other pages is general in nature and doesn’t consider your personal or business objectives, needs or finances. It’s always important to consider whether advice is suitable for you before purchasing an insurance policy.

For any further information on the variety of insurers compared by Compare Club or how their business works, you can read their Financial Services Guide.

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