Life Insurance with a Mental Illness

Your mental health is important and will be considered by insurance agencies. It may prove to be more difficult to apply and be approved for life insurance, but definitely feasible with proper documentation. Mental illness can have a significant impact on your life, and it is crucial to choose life insurance that will provide you with what you need.

In this article:

• What is considered a mental illness? 
• How your mental illness will affect life insurance
  • What to do if you are denied
  • Lying about your diagnosis
• How to get the right coverage for your mental illness
• Best life insurance companies for mental illness
• Frequently Asked Questions (FAQs) about life insurance with a mental illness

What is considered a mental illness for life insurance? 

Mental health diagnoses can be classified into either mental health conditions or mental illnesses depending on the severity of the condition. NAMI (National Alliance on Mental Illness) defines a mental illness as a condition that affects the thinking, feeling, behaviour or mood of an individual. A mental illness is not something you can control but unfortunately can have impacts on daily living and social interactions. 

Mental health conditions defined as mental illnesses by NAMI include: 

• Anxiety Disorders 
• Attention Deficit Hyperactivity Disorder (ADHD) 
• Bipolar Disorder 
• Borderline Personality Disorder (BPD) 
• Depression 
• Dissociative Disorders 
• Eating Disorders 
• Obsessive-Compulsive Disorder (OCD) 
• Posttraumatic Stress Disorder (PTSD) 
• Psychosis 
• Schizoaffective Disorder 
• Schizophrenia 

The severity of your mental illness is vital for rank assessment and calculating premiums, and is measured with the CGI-BP scale: 

How your mental illness will affect life insurance 

When you are applying for life insurance with a mental illness; you may encounter some push-back in the form of extended applications and higher premiums.

At the start of your life insurance application, you will be asked a series of questions regarding your diagnosis. These questions vary from company to company, but usually relate to: 

• The time of your diagnosis 
• The severity rating of your diagnosis 
• Symptoms that affect daily living 
• Treatment plan 
• Frequency of your episodes 
• Your hospitalization record 

You will also be required to share your medical history in the form of documents and doctor evaluations. Depending on what may be found in your file, you may be asked to undergo medical examinations to evaluate your mental health. In some cases, it may be difficult to acquire the necessary coverage. 

What to do if you are denied

Your mental health diagnosis may cause you to be declined for traditional life insurance, however, you still have a couple of options to get coverage: 

• Guaranteed Issue Life Insurance 
  • Guaranteed issue policies come at a steeper price than the traditional term life insurance and have age restrictions in place, however, they are significantly easier to obtain. They offer almost certain approval and usually forgo the medical exam and any medical questions. Unfortunately, not all life insurance companies offer guaranteed issue life insurance, and those that do will max out coverage around $50,000 for a higher price because of the high-risk assessment. This is still a great option for individuals suffering from severe or untreated mental illnesses or who have had recent hospitalizations due to self-harm or panic attacks.

• Simplified Issue Life Insurance 
  • Simplified issue policies are similar to guaranteed issue policies in that they do not require medical exams, but you will still be required to answer a few medical questions, but these are standard to the most basic forms of life insurance. This is a great option for individuals suffering from moderately severe mental illnesses. 

• Group Life Insurance 
  • Group life insurance policies are offered by your employer and are considerably more affordable than the other 2 options listed above, however, you will get minimal coverage which will be lost if you leave the company. This type of insurance is dependent on your employer. 

Read our article about Guaranteed Issue vs Simplified vs Fully Underwritten Life Insurance to learn more about these policies.

Lying about your diagnosis

After hearing the risks and chance of being declined coverage it may seem tempting to lie about your diagnosis. Although mental illnesses may not be as physically obvious as other disabilities it is equally important to be completely transparent with your insurance provider. Life insurance companies have access to databases such as the MIB (Medical Information Bureau) and can confirm your medical information. Anything that does not match up can be considered fraud and will have serious consequences. Medical record checks will reveal your prescription and diagnosis history, but even if you slip past those, your provider can terminate your policy and deny a death benefit if it is revealed. 

Most life insurance policies will have a 2-year suicide clause in place to prevent individuals from purchasing life insurance with the intent to commit suicide. Companies will also have a contestability clause for the first 2-3 years which allows them to investigate any death claims for evidence of fraud. 

It may seem daunting to approach finding the right life insurance with mental illness, but lying about your diagnosis is never the way to go. 

How to get the right coverage for your mental illness 

Life insurance is important to ensure your loved ones are covered upon your death, but if you are suffering from a mental illness there are a few things to consider before jumping right into finding the insurance company for you. 

In most cases applying for life insurance should be done sooner rather than later for lower premiums, however, if you are suffering from a mental illness it is important to wait for the right time. Ideally, you want to apply when your treatment is going well and has been for at least a year. This will not only give your body time to adjust to your medication and treatment but also will show insurers that you are in control of your condition. This will give you a better rating and more affordable premiums. 

If your initial application does not go through, do not fret. You can enlist the help of an agent to find the reason you were declined and they can help you decide when you should revisit reapplying. 

Best life insurance companies for mental illness

A mental illness diagnosis and treatment will have an impact on your life insurance, but it is important to consider that 1 in 5 adults experience mental illness and it should not affect the way you choose to live your life. Your life insurance should reflect that. 

The following are the best companies that offer life insurance for mental illnesses with the least hassle for application; fewer questions and medical exams. However, any insurance company may be viable, and it is advised to speak to an agent before making any decisions. 

Frequently Asked Questions (FAQs) about life insurance with a mental illness

Finding the right life insurance for you 

Even if you are obtaining treatment for a mental illness, you can find affordable life insurance in any situation. You can enlist the help of an agent for free to find the best life insurance for you and your needs. 

If you’re not sure of what’s the best insurance plan or company for you, working with a life insurance specialist can help you find the best solution to fit your particular situation. At Protect Your Wealth, we’ve been providing expert advice for all types of life insurance since 2007. As your trusted Life Insurance broker and financial planner, we work with you to create a plan for your family or business that covers and meets your needs, free of extra charges.

Contact Protect Your Wealth or call us at 1-877-654-6119 to talk to an advisor today. We’re proudly based out of Hamilton, and service clients anywhere in Ontario, Alberta, and British Columbia, including areas such as Burlington, Oshawa, Maple Ridge, Richmond, Edmonton,  and St. Albert.