Mental health and insurance cover
A mental health condition can have a significant impact on your life. It may also in some cases make it more difficult for you to get insurance cover. We explain what insurance is, how it works and how pre-existing mental health conditions can affect your insurance application.
Insurance products can offer vital protection and security for yourself and your family when life does not go to plan.
What is insurance?
Insurance helps you protect yourself against things that might happen to you in the future, such as a car accident, leak in the house, medical treatment for a mental or physical health condition or in the event of your death.
There are several different types of insurance. Some insurance is compulsory; for example, you can’t drive a car without car insurance.
Optional insurance - which means you can decide if you need it or not - gives you the ability to insure yourself and your family for specific circumstances such as life insurance.
There are different lengths of insurance policies. Some are short-term products (like your home, travel or private medical insurance policy which are usually bought every year) and some which are long-term (like life assurance insurance or income protection) which can be up until you retire, complete repayment of your mortgage or pass away.
A mental health condition, just like a physical health condition, should only be taken into account for products that are linked to your health and lifestyle, such as life assurance insurance, income protection insurance, private medical and travel insurance (should you need medical care abroad).
How does insurance work?
During the insurance application, the insurer will calculate how likely the event you insured against will happen and decide how much you will need to pay for the insurance - your premium.
This process is called ‘Underwriting’ which allows insurers to ensure the cost of the insurance is proportional to the risk involved. This means people with the same or similar risks will pay a similar premium.
To assess your risk for insurance, the provider will use several sources which include:
- Your application form.
- Questions about your lifestyle.
- Your medical history.
- A Doctors report.
- Historical data and research.
After the data has been collected, the insurance company will calculate your risk and decide whether to:
- Offer your insurance policy at the premium originally quoted - in some cases with an increased premium.
- Make exclusions to your policy.
- Not offer you insurance at all.
Insurance policies are for a set amount of time, for example, a year or until you retire. You will pay your insurance premium as a one-off payment, or in monthly or annual instalments depending on the type of insurance and the term of the policy.
Do I need insurance?
Insurance gives you peace of mind, and if you do end up in a situation where you need to make a claim, insurance removes potential financial burden and unnecessary worry.
But you need to weigh up the benefits of having insurance against how much it costs you and how likely you are to make a claim.
Insurance and mental health care
Insurance policies can include mental health care which can support you if you have a mental health condition.
Some insurers offer specialist mental health support. After you have taken out the policy you may be able to:
- Obtain quick mental health assessments.
- Have an assigned case manager.
- Get a tailored treatment plan.
- Access mental health support groups.
- Access rehabilitation services to help you with your mental health if you need to take time off from work.
Challenges to getting insurance with a mental health condition?
Most people with mild mental health conditions have no issues finding insurance. Unfortunately, in some cases, you may find it more challenging to get the appropriate insurance cover.
We have made a list below to help you understand how your mental health can impact your insurance application:
- Some providers of private medical insurance do not cover pre-existing medical conditions - a physical or mental illness that you have or have had in the past.
- Your insurance premium may be increased if they think you are more likely to make a claim - this is known as premium loading.
- You may be offered a shorter term for your insurance.
- An exclusion relating to mental health conditions may be applied for income protection.
- You may have to accept exclusions to the policy.
- Life insurance policies do not include death by suicide in the first 12 months of the policy as standard whether you have a mental health condition or not.
Insurance and pre-existing mental health conditions
A pre-existing medical condition is either a psychological or physical condition, that you already have at the time you apply for insurance.
When applying for insurance, you will be asked to provide information on your mental health and whether you have been diagnosed with or previously treated for a mental health condition.
It is a legal requirement for you to be honest when applying for insurance. You should give accurate information as it affects the risk assessment, your premium and the terms and conditions of your insurance policy. If you have been dishonest in your application, you may have your policy voided, so it might not pay out if you make a claim.
What can I do if I have been refused insurance because of my mental health?
Being declined for insurance because of a pre-existing mental health condition can be upsetting. However, there are still steps you can take to get the right insurance cover:
- Mental health and insurance cover
- What insurance might I need if I have a mental health condition?
- How to find the right Insurance cover with a mental health condition
- Specialist insurance providers for pre-existing mental health conditions
- What are my rights when applying for insurance with a mental health condition?
- How to make a complaint about an insurance decision made about your mental health
- Advice for insurance professionals working with a client who has a mental health condition