Mental Illness and Life Insurance
Current statistics cited by the National Alliance on Mental Illness (NAMI) show that in any given year, one in five adults in the U.S. experience mental illness, with 1 in 25 experiencing a serious mental illness such as schizophrenia or bipolar disorder. This means that every year, there are 46.6 million Americans living with mental illness. Among these people, approximately 20 percent will also have a co-occurring substance use disorder as well.
These numbers indicate that mental illness is a significant issue in the United States. For adults living with depression, anxiety, or other mental illnesses, there may also be concerns about how their mental illness diagnosis will affect the process – and the cost – of obtaining life insurance.
Life Insurance and Mental Health
Life insurance is a risk-based industry, so naturally, companies want to issue policies to those that pose the lowest risks. Individuals with cancer or other serious illnesses are often denied life insurance or are required to pay higher costs to mitigate the risk. Individuals with no health concerns are often issued less-expensive policies.
If you have been diagnosed with a mental illness, you might be concerned that you will be unable to obtain life insurance. The good news is that you may not have trouble buying a life insurance policy if you have a well-documented history of treating your condition.
In general, life insurance companies are looking for those who have the lowest statistical risk of early death. Mental illnesses with a low risk of death, including obsessive-compulsive disorder (OCD), attention deficit hyperactivity disorder (ADHD), situational depression, mild to moderate anxiety or depression, and bipolar disorder all have a lower risk of early death by suicide or other causes. Therefore, they should not affect premium costs or the ability to obtain an insurance policy.
Underwriters will likely ask when you were diagnosed and by whom. They will also want documentation of the prescribed treatment, the length of treatment at a counseling or mental health rehab facility, and how you responded. If you responded well to your treatment and your condition is mild and controlled, you will likely receive favorable rates. The insurance company may want you to wait three to six months after being diagnosed to see how you respond to treatment.
What about an agents view? I reached out to Michiganhealthbroker, INC., an insurance agency in Michigan to discuss possible underwriting concerns with consumers with mental health issues (current or past). “We are running into more and more people with different mental health concerns,” owner Jack Stephens said. “The most important thing everyone needs to know is that insurabillity is still possible no matter what health effects have happened. They just have to be honest,” was another statement worth noting. Again this could change if taking illegal drugs.
If you have a more serious mental illness, such as schizophrenia, major depression, or a co-occurring substance abuse disorder, you might face a more complicated process. If you have made one or more suicide attempts, many insurance companies will not automatically deny you a policy. They may make you wait one to two years following your suicide attempt to see how you respond to treatment.
Some insurance companies may charge higher premiums for five years following a suicide attempt if there is an ongoing risk of suicide. If you seek appropriate treatment during those five years and your mental health is stable, there is a good chance that your insurance premium will decrease.
Nearly every life insurance policy will also have a contestability clause. This clause exempts the life insurance company from paying benefits if you die by suicide within the first two years of your policy. This clause exists regardless of whether the policyholder has a documented mental illness or not, but it is an important consideration for people with serious mental illnesses.
Additionally, if you have a substance use disorder, you will probably need to complete treatment before you are approved for life insurance. People who are currently using illicit drugs will likely be denied a policy. If you have been in recovery for several years, the chances are good that you will be offered a policy.
Tips for Working with Your Insurance Company
Hiding your substance use or mental illness may produce serious repercussions.
Even if you have a life insurance policy after living a sober lifestyle for years or seeking treatment for your mental illness, your insurance company may cancel your policy if it finds evidence that you attempted to cover up your history. Additionally, if you happen to die of any cause within the contestability period and the insurance company discovers that you did not disclose substance abuse or mental illness, it may deny death benefits.
Above all, be honest about your substance abuse history or mental illness. Chances are high that the company wants to work with you and will help you find a policy, even if you have to wait a few years. If you currently have a form of mental illness, it is important to seek treatment. The sooner your condition is under control, the quicker you will be able to obtain a life insurance policy and reap other benefits from your sobriety.
Charles Watson is the current SEO and head content writer for Sunshine Behavioral Health – Texas. A lifelong health advocate, Charles can be found during these months sitting down the third baseline at most Detroit Tiger games. He can be reached directly on Twitter at @charleswatson00.
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