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Your mental health history can have an impact on your life insurance rates. Here's how to get the affordable coverage you need.
Medically-underwritten term life insurance is a great way to protect your family and is the most cost-effective way for most people do to that — but the "medically-underwritten" part means it can be a little daunting to apply.
Sharing your health history can be daunting, and this can be especially true when it comes to your mental health history. Many people view mental health diagnoses as extremely private, or situational and irrelevent 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 diagnoses or have recieved treatment doesn't necessarily mean your rates will be higher. There are some insurers who can will offer you 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.
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 how that each insurer rates that condition.
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.
Insurers take mental health history into account. 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 be higher. In some cases, you may outright be denied.
Even if you have been diagnosed with mental health issues, it's possible to get affordable rates on your term life insurance.
Let's use depression as an example. Depression is linked with health risks, so some insurers are more rigid in how they'll rate applicants who have a history of depression.
Here are the best life insurance companies for people with depression:
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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).
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 even 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 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 deny your beneficiary's claims.
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 woman isn’t at risk of suicide, if an insurer sees postpartum depression in her mental health history, she may rated just as if she had ongoing depression.
The reason for this? Underdiagnosis of mild and moderate postpartum depression.
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 independent broker to see how different companies deal with postpartum depression will help save you some headaches (and maybe some money) in the long run.
The possibility of postpartum depression hiking your rates is another reason why it’s best to get life insurance before you are pregnant.
No matter what your health history, an independent broker can help match you with the insurer who will give you the best rates.
Still need help? Find the best life insurance company for you.
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