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Living with depression or anxiety can impact your life insurance rates. Here's how to get the affordable coverage you need.
Disclose your entire mental health history to the insurance company to receive accurate rates
Premiums vary depending on the severity of depression or anxiety and your treatment history
Insurers can deny or reduce the death benefit if you misrepresent your mental health history
Purchase a policy before becoming pregnant to avoid increased rates due to postpartum depression
Medically underwritten term life insurance is a great, cost-effective way to protect your family — but the "medically underwritten" part means it can be a little daunting to apply.
Sharing your health history can be intimidating, especially when it comes to your mental health history. Many people view mental health diagnoses as extremely private, or situational and irrelevant to their physical health. But life insurance underwriters want to know your full health picture, including mental health diagnoses like depression and anxiety.
But just because you have a diagnosis or you’ve received treatment for a mental health issue, that doesn't necessarily mean you will be denied coverage or that your premiums will be higher. Some insurers will still offer you the best rates if you have a history of mental illness.
Your mental health history can play a role in how your life insurance rates are set, and as with all health details, it’s important to be open and honest when you’re applying.
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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.
Note that rates could be affected, not that they definitely will. It depends on your diagnosis and how each insurer rates that diagnosis.
Life insurance rates are determined by your health classification which helps insurers assess how risky you are to insure. Life insurance companies use aggregate data and actuarial tables, which basically display the probability a person will die at each age, to see how likely you are to die over the term of the policy.
Insurers include mental health history in this assessment. If you have obsessive-compulsive disorder, it most likely won’t affect your insurance rates. If you have a diagnosis more commonly linked to suicide, like severe depression, bipolar disorder, or paranoid schizophrenia, your rates will be higher. In some cases, you may be denied coverage.
Even if you have a pre-existing mental health condition, it's possible to get affordable rates on your term life insurance.
Most individuals experience feelings of stress or anxiety, but life insurance underwriters are principally interested in anxiety diagnoses that require medication or might affect your daily life, like generalized anxiety disorder, post-traumatic stress disorder, and obsessive-compulsive disorder.
As with other medical conditions, underwriters will evaluate the history and severity of your anxiety diagnosis. They will consider the kind of anxiety you experience, your symptoms, and how you manage those symptoms.
If you consistently take medication or see a mental health professional for your anxiety, that will likely improve your chances of a better classification. If you have been hospitalized due to anxiety symptoms, that may negatively affect your classification. Is your anxiety situational? If you only need medication for your anxiety when on an airplane, for example, you may be given a better rate than someone who takes anxiety medication every day.
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Postpartum depression is typically a limited condition that usually occurs within the first three months of having a baby, but it sometimes gets lumped in with clinical depression by insurers.
This means if an insurer sees postpartum depression in your mental health history — even if it’s not an ongoing condition and you’re not at risk of self-harm — you may be rated as if you had ongoing depression.
The reason for this? Underdiagnosis of mild and moderate postpartum depression.
Since there’s limited information about postpartum depression, insurers work from 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 with higher coverage amounts, and other insurers don’t consider postpartum depression at all. The possibility of postpartum depression hiking up your rates is another reason why it’s best to get life insurance before you are pregnant.
Let's use depression and anxiety as examples. Clinical depression and anxiety are linked to health risks, so some life insurers are more rigid in how they rate applicants who have symptoms of depression or anxiety.
Sample health classifications by insurer for a healthy adult with mild depression prescribed one medication
|Mutual of Omaha||Preferred|
|Principal||Super standard, possible Preferred|
|Protective||Standard, possible Preferred|
Sample health classifications by insurer for a healthy adult with mild anxiety prescribed one medication
|Mutual of Omaha||Preferred|
|Pacific Life||Preferred Best|
|Protective||Standard to Preferred|
Sample health classifications by insurer for a healthy adult with mild anxiety & depression prescribed one medication
|Mutual of Omaha||Standard|
|Pacific Life||Substandard to Standard|
|Principal||Standard, possible Super standard|
|Protective||Standard, possible Preferred|
Life insurers will look at your entire mental health history, and they are mainly looking for consistency. If you’ve been diagnosed with depression or anxiety but haven’t taken any steps toward treatment, your rates will almost certainly increase. However, if you show signs of regular, active treatment, such as medication and therapy, you may still receive a good health classification. A history of hospitalization could be a red flag for insurers, but it’s something you should be honest about or there could be penalties.
Here are a few of the questions you’re likely to be asked:
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, the insurance company will look at your medical history, the results of your paramedical exam, your prescription history, and maybe your medical records in order 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 covers the first one to two years your policy is active, and lets an insurer investigate whether you misrepresented any application information. If you die during this period and they find evidence of fraud, the insurance company can deny your beneficiary's claims or lower the death benefit that they pay out to them.
This differs from the “suicide clause” included in most insurance policies, which may allow a company to deny a claim if they can prove that someone died by suicide within two to three years of receiving life insurance coverage.
If, in a rare case, multiple life insurers deny you coverage based on your mental health history, you may be able to buy a policy through your employer. Many employers offer group life insurance, for which you are not required to submit health history information. The downside is that these policies are contingent on your continued employment and generally come with a lower death benefit amount than a policy you purchase yourself.
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