Life Insurance with a Mental Health Diagnosis in Canada

The conversation surrounding mental health has evolved significantly in recent years and has become a less stigmatized issue. However, many Canadians who experience mental health issues may not be aware that it can be more difficult to qualify for life insurance with a mental health diagnosis in Canada.

Life insurance is an essential way to safeguard your loved ones and lessen the impact of an unexpected death. However, a mental health diagnosis might increase premiums and can make it more difficult to be approved for a life insurance policy. This guide will delve into the complex relationship between mental health and life insurance in Canada, and explore the potential challenges individuals with mental health diagnoses may face when seeking coverage.

In this article:

• How Mental Health Affects Life Insurance
• Mental Illnesses That Are Considered by Insurance Providers
• What to Do if You Are Denied Insurance Due to Your Mental Health
• What Happens if You Fail to Disclose a Mental Health Diagnosis
• Best Life Insurance Companies for Mental Illness
• Frequently Asked Questions (FAQs) About Life Insurance With a Mental Illness

How Mental Health Affects Life Insurance

Mental disorders are often considered a pre-existing condition, but this shouldn’t deter you from getting life insurance. Even with a mental health diagnosis, you are absolutely still eligible for life insurance, but should be aware of potential challenges in the application process. When you apply for life insurance with a mental health diagnosis you may face extended application wait times, higher premiums, and even application denial in extreme cases. This is because insurance providers evaluate the risk associated with each application before approving the application and determining the cost of premiums and those with a pre-existing condition may be determined to be higher risk applicants.

At the start of your life insurance application, you will likely be asked a series of questions regarding your diagnosis that help the insurer better understand these potential risks. These questions differ between insurance providers, but are typically along the lines of the following:

• How long ago were you diagnosed?
• How severe is your diagnosis?
• What symptoms do you experience?
• How frequently do you experience symptoms?
• How do these symptoms affect your life and functioning?
• Can you explain your treatment plan?
• Do you take any medications?
• Can you provide information on any previous hospitalizations?

You will also likely need to share your medical history, including any medications you take, and may be required to undergo a medical exam to further evaluate your health status. However, if you are worried about your application being denied or are not interested in undergoing a medical evaluation there are many providers who offer no medical life insurance with simplified or guaranteed insurance policies that are helpful for applicants with pre-existing conditions.

While for the majority of people applying for life insurance coverage it is better to apply sooner rather than later in order to qualify for lower premiums, those with health conditions may also benefit from waiting for the right time. This is because demonstrating that you are treating your diagnosis or symptoms successfully can show insurance providers that you are in control of your condition and can lower your risk to insure resulting in application approval and lower premiums.

Here is a helpful overview of some factors that may increase your risk to insure:

Mental Illnesses That Are Considered by Insurance Providers

According to the Public Health Agency of Canada, mental illness is characterized by alterations in the mood, thinking, or behaviour of an individual that causes significant distress and impairs functioning. Some examples of common mental illnesses that may be considered by life insurance providers include:

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

Mental illnesses can vary in severity so determining how severely mental health affects an applicant is vital for approval and calculating premiums. According to an article by the Centre for Addiction and Mental Health (CAMH), In Canada insurers use the DSM-5 as the standard when determining acceptable mental health diagnoses. Typically, the Global Assessment of Functioning (GAF) Scale is used to determine the severity of a mental illness and how it affects an individual. Those with a GAF score of 50 or lower are considered to be experiencing total disability and would see their premiums and application status affected.

Here is a visual representation of the Global Assessment of Functioning (GAF) Scale which is used to determine severity of a mental health condition by many Canadian insurers:

What to Do if You Are Denied Insurance Due to Your Mental Health

It is possible to be declined for traditional life insurance due to mental illness. If your application is denied you still have a couple of options to get coverage such as through guaranteed and simplified issue life insurance policies.

Guaranteed Issue Life Insurance

• No medical exams or questionnaires required.
• Designed for difficult to insure individuals.
• Premiums are more expensive than traditional insurance.
• Less maximum coverage than a traditional policy.

Simplified Issue Life Insurance

• No medical exams required.
• Applicants must complete a medical questionnaire.
• Designed for applicants with more moderately severe conditions.
• Premiums can be slightly more expensive than traditional insurance.

What Happens if You Fail to Disclose a Mental Health Diagnosis

It’s common to worry about being denied coverage due to something that’s out of your control, such as your health. However, failing to disclose a health concern to your insurance agency is never a good idea and can lead to a lot more issues than application denial. 

Insurance providers will collect personal information directly from applicants and from medical professionals with permission from the applicant. But, they may also access databases such as the MIB (Medical Information Bureau) to confirm any medical information they have or have not collected from the applicant. It is important to be transparent with life insurance providers as lying on an application about medical concerns can be considered fraud and can result in serious consequences.

Beyond the legal implications of withholding information from your insurer, insurance companies may also terminate your policy or refuse to pay out a death benefit if they discover you weren’t truthful on your application. Being sure to provide truthful and accurate information to insurance providers is not only the right thing to do, it is also a much safer approach for those interested in obtaining life insurance coverage.

Best Life Insurance Companies for Mental Illness

There are many top life insurance providers in Canada with lots of options to choose from. Applicants that suffer from mental illness are still able to get traditional insurance products depending on the severity of their condition, but which provider is best for them will depend on the applicant’s financial goals and interests. The following insurance providers are some examples of insurance companies that offer life insurance to individuals with pre-existing mental health conditions with no medical exams and limited questions.

Humania Assurance – Insurance without Medical Exam (IWME)

Coverage: $5,000 – $300,000 

Length of coverage: 10, 20, or 100 year terms

Issue ages: 18-70 

Number of questions:

• 6 questions to determine eligibility
• 12 medical questions to determine premium rates

No medical exam required

Industrial Alliance (iA) – Access Life 

Coverage: $10,000 – $500,000

Length of coverage: 15, 20, or 25 year terms or whole life

Issue ages: 6 months-80 years

Number of questions: 

• No questions for Guaranteed Access
• 5 medical questions for Deferred
• 9 medical questions for Deferred Plus
• 13 medical questions for Immediate Plus

No medical exam required

Canada Protection Plan (CPP) – Guaranteed Acceptance Life

Coverage: $5,000 – $50,000 

Length of coverage: Whole life

Issue ages: 18-75

Number of questions:

• No questions required

No medical exam required 

Frequently Asked Questions (FAQs) About Life Insurance With a Mental Illness

Finding the Right Life Insurance for You

It can be difficult to find life insurance with a mental health diagnosis in Canada. Whether you are struggling with a mental illness or another pre-existing condition you are still able to qualify for life insurance. To make the process easier you might want to enlist the help of an insurance agent who can help you find the best plans you qualify for, at no cost to you.

Working with a life insurance specialist can help you find the best solutions to fit all of your life insurance and financial planning needs. At Protect Your Wealth, we’ve been providing expert advice for all types of life insurance since 2007. We work with our clients to create a plan for your family or business that covers and meets your needs, free of charge.

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