You can get disability insurance if you have a mental illness, but your coverage could be somewhat limited. Shop around for a plan that fits your needs.
If you have disability insurance, you’ll can receive monthly payments from the disability insurance company for when you become disabled and can’t earn an income. In order to be eligible for benefits, the disability usually has to begin after you’ve purchased coverage. If you have a pre-existing condition, it may be excluded in your policy, or cause you to be denied coverage in the first place.
Mental illness, however, doesn’t necessarily result in an exclusion or outright denial. Not only can you get disability insurance coverage if you’ve been diagnosed with a mental illness; in some cases, you may be even eligible for full, unlimited coverage, depending on the type or severity of the disorder.
Nevertheless, it’s common for people with mental illness who are eligible to receive disability insurance to face some kind of coverage limitations, or to pay more for the same coverage offered to someone without a mental illness.
Note that this article is about long-term disability insurance (LTDI) unless otherwise noted. While Social Security disability insurance (SSDI) may offer you some coverage if you are diagnosed with a mental illness, only LTDI most fully replaces your income when you become disabled.
As with life insurance, when you apply for disability insurance, you must disclose any physical or mental health conditions you have. If you fail to do so, the insurer may cancel your policy, and that could happen when you need it most.
Having a pre-existing condition could result in several outcomes when you apply for disability insurance, depending on the severity of the condition and the insurer’s own underwriting guidelines:
Your application is rejected.
Your application is accepted, but the pre-existing condition may be excluded from coverage.
Your application is accepted, and your pre-existing condition has limited coverage.
Your application is accepted with no limitations or exclusions for the pre-existing condition.
In order to get disability insurance coverage for a pre-existing condition, you may need to show that you’ve been seeing a physician or health care professional who’s treating it.
Unfortunately, having certain pre-existing conditions can cause you to be placed in a less favorable insurance classification (also known as risk class). That means you’ll pay higher premiums than someone in a more favorable risk class.
Content warning: suicide, depression
How a disability insurance company covers mental illnesses depends on whether the mental illness is a pre-existing condition or whether it develops after your purchased coverage.
Each insurer uses a different set of underwriting guidelines when determining whether you’re eligible for disability coverage. Depending on the type of your illness, its prognosis, and its severity, you may be offered individual consideration for full coverage; a denial of coverage; or lesser coverage, including lower benefit amounts and shorter benefit periods.
Mental illness includes such conditions as anxiety, depression, panic disorders, schizophrenia, bipolar disorder, and suicide ideation. It’s up to the insurer to determine how much risk a certain disorder poses to you and the likelihood that you’ll become disabled because of it.
For that reason, mental illnesses like anxiety, depression, and bipolar disorder are more likely to be covered than conditions like schizophrenia that are more difficult to treat. Additionally, if you’ve attempted suicide in the past, the insurer may require that a certain number of years has passed – usually 10 – before you can be considered for disability insurance coverage.
If an insurer won’t cover you because of your mental health, you may still be able to get coverage from another insurer. A licensed representative at Policygenius can find you a policy with coverage for your mental illness while being sensitive to your individual needs.
Whether your mental illness is a pre-existing condition or was diagnosed after you purchased coverage, your disability insurance may be governed by a limitation rider. Insurers may call it different things, such as:
Mental/nervous & substance abuse (MNSA) limitation rider
Mental disorder/substance abuse limitation rider
Mental and/or substance-related disorders (MSRD) limitation rider
Whatever it’s called, this rider limits the benefit period – the span of time during which you can receive disability insurance benefit payments – to just two years for disabilities caused by a mental illness. (Some versions of the rider make this limitation just six months.)
That means if you’re still disabled after the shortened benefit period ends, you’ll no longer be eligible for benefit payments. The benefit period for other disabilities remains unchanged.
Depending on the state you live in, your insurer may require you to have this rider. In other cases, the rider may be optional and free to add, and you could potentially receive a discount of as much as 10% off your premiums for adding it.
If you’re willing to pay higher premiums, you can get a disability insurance policy without this rider, giving you unlimited coverage for mental illness if you’re otherwise eligible.
The mental illness and substance abuse limitation rider may be required for some people in certain professions. But higher-paid professionals, such as attorneys or certain types of doctors, may qualify for a disability insurance policy without a limitation rider.
Limitation riders are also required for guaranteed-issue disability insurance, which doesn’t require medical underwriting but could have a smaller benefit amount. (Long-term disability insurance should replace about 60% of your gross income.) You may be able to purchase a guaranteed-issue policy individually; they are also offered by some employers as part of a group disability insurance plan.
Disability insurance replaces around 60% of your pre-tax income while you're disabled and can't work.
You may have heard that short-term disability insurance (STDI) doesn’t cover mental illness. In fact, it’s more accurate to say that whether STDI covers mental illness or not depends on the insurer, just like LTDI.
Since it’s difficult (and financially unwise) to purchase STDI coverage on your own, you’re more likely to receive an STDI plan from your employer. Be sure to request a copy of the policy from your benefits administrator to make sure it contains coverage for mental health.
Social Security disability insurance can cover you if private disability insurance does not. However, it’s not a replacement for long-term disability insurance if you are eligible for the latter, as SSDI only offers a limited benefit amount and may be very difficult and time-consuming to qualify for. Rejections and appeals can take years to resolve.
In order to qualify for SSDI, you don’t need to pay anything, but you do need to show that your mental illness is severe enough that you can’t work and likely won’t be able to work for at least 12 months. That means that, while there technically aren’t any exclusions or limitations, you do need to meet a strict definition of disability that many sufferers of mental illness may find difficult to prove.