Term life insurance is a great way to protect your family, but it can be a little daunting to apply. After all, you’re sharing personal details about yourself to a complete stranger.
This can be especially true when it comes to your mental health history. Mental illness has a stigma that isn’t easy to shake, and many people don’t want to subject themselves to that. Not to mention that there’s an aspect of people feeling better after a bout of mental illness and not wanting to feel like it’s controlling them forever.
Some people feel frustration at having a brief period of mental health issues far in their past – even as minors – dragged up over and over again. Others have been rejected for taking the initiative to treat their anxiety.
But there are some insurers out there who can work with you to get you the best rates even with a history of mental illness. Your mental health history can play role in how your life insurance rates are set, and as with all health details, it’s important to be open and honest about it when you’re applying.
Mental health and insurance rates
Your full health, both physical and mental, will be evaluated after you apply for your life insurance policy. That means you’ll have to be upfront about your mental health history – and it could affect your rates.
Many insurers note that rates could be affected, not that they definitely will. It depends on the condition and, more specifically, the risk that it puts you at.
Life insurance rates are set by what classification you’re put into, and the classification is an assessment of how risky you are to insure. This is done using aggregate data and actuarial tables – which basically display the probability a person will die at each age – to see how likely it is they’ll die over the term of the policy.
Take hobbies as an example: if you’re a skydiver, you’re riskier to insure than a stamp collector, so you’ll cost more to insure. That’s because data shows that skydivers are more likely to die due to their chosen hobby. Not a huge surprise.
While insurers look at these types of issues in the same light, there's a broader scope for how mental illness is defined by each insurer. If you have obsessive compulsive disorder, it most likely won’t affect your insurance rates. If you have a condition more highly linked to suicide, like severe depression, bipolar disorder, or paranoid schizophrenia, your rates will jump. In some cases, you may outright be denied.
Even if you are diagnosed with mental health issues, it's possible to get affordable rates on your term life insurance. A 26-year-old female diagnosed with general anxiety, but who takes medication daily, can get a $250,000/10-year term for less than $11 a month. Similarly, a 32-year-old male diagnosed with ADHD who takes daily medication and goes to therapy can get a large policy - $1.75 million/15-year term - for around $63 a month.
Protective, Prudential, and MetLife are among the carriers we work with who we’d rate as "excellent" when it comes to working with customers with a history of mental illness. Check out our insurer ratings for more information on how different carriers rate on different medical issues.
Insurers will look at your full history when it comes to your mental health. If you’ve been diagnosed but haven’t taken any steps toward treatment, your rates will almost certainly increase. However, if you’ve shown signs of active treatment, such as medication and therapy, there’s a good chance you’ll see little (or even no) change in your classification. A history of hospitalization could be a red flag for insurers, but it’s something you should still be honest about or there could be penalties (as we’ll see below).
The application process
When you’re getting quotes, it’s up to you to be accurate about your mental health history. You’ll answer a lot of questions about your health, and some of them will be geared toward your mental health. Here are a few of the questions you’re likely to be asked:
- Have you ever been treated for and/or taken medication for depression?
- When were you diagnosed?
- What was your diagnosis (Mild, moderate, or severe)?
- Are you currently undergoing treatment?
- How many different types of medications are you currently taking?
- Are you currently in psychotherapy treatment?
- Have you ever been hospitalized due to depression?
Your answers to these questions will determine how accurate your quotes are. If you lie, you’ll be hit with a big surprise when your rates are a lot higher after you apply. Answer these questions as accurately as possible when you’re getting quotes so you have a better understanding of what your final rates will look like.
After you apply for life insurance, a little more light will be shed on your mental health history. A paramedical exam, attending physician statements, and research into your prescription history will tell an underwriter what they need to know to define your health classification and, ultimately, your rates.
If you do manage to hide your mental health history, you could still be penalized. The contestability period lets an insurer investigate deaths within the first two years of a policy, and if they find evidence of fraud (like you didn’t tell them something about your mental health history) they can lessen the death benefit given to your beneficiary or outright deny it.
Most policies also have a suicide clause and won’t have the death benefit in the case of a suicide within the first two years of the policy. If you have a mental health condition that increases your risk of suicide, you may be putting your beneficiaries at risk, too.
One particular area to note is postpartum depression. Even though this is typically a limited condition – usually occurring within the first three months of having a baby – it sometimes gets lumped in with general depression by insurers.
This means that even if it’s not an ongoing condition and a mother isn’t at risk of suicide, if an insurer sees postpartum depression in her mental health history, she may be hit with the same rate hikes.
The reason for this? Underdiagnosis of mild and moderate postpartum depression.
Remember how life insurers use actuarial tables to look at aggregate data and determine someone’s riskiness to classify them? Well, since there isn’t a lot of information to look at for postpartum depression, insurers have to go off of information they have on other types of depression, which may not be accurate. It’s different with every company; some will only dig into it with policies over a certain amount, and other insurers don’t even consider postpartum depression at all. Working with an agent to see how different companies deal with postpartum depression will help save you some headaches (and maybe some money) in the long run.
We’ve talked before about the life insurance "baby bump" when insurance rates can jump due to conditions like weight gain and gestational diabetes. Postpartum depression is another reason why it’s best to get life insurance early on in your pregnancy. If you haven’t purchased life insurance before your pregnancy or during the first trimester, you’re best waiting 2-3 months after your pregnancy.
Life insurance is an important part of your financial safety net, and although a history of mental health can make things a little more difficult, it’s still important to look into. Remember, start with insurers who can work with you – Protective, Prudential, and MetLife are all great starting points – and see what options are available to you. An independent agent can help you navigate those waters and you can be on your way to financial protection.