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Having a mental health condition can be a challenging journey, and you might wonder whether you can qualify for life insurance coverage. The good news is that having a mental health condition doesn’t automatically mean you won’t qualify for life insurance coverage. By researching the best life insurance policies for those with a mental health condition, and knowing what to expect when applying for a policy, you may be better equipped to find the coverage you need. To help you get started, Bankrate discusses the types of mental health conditions that could affect life insurance, what to look for when shopping for life insurance, and what to do if you are denied coverage. With the right knowledge and preparation, you might be able to find a policy that fits your needs.
What is the best life insurance if you have a mental health condition?
There are several types of life insurance options available for people with mental health conditions. Understanding the different types of policies available is the first step toward finding coverage available to people with medical conditions related to mental health.
- Term life insurance: Term life insurance is the least complex life insurance product available, but it only offers coverage for a set period. This type of coverage is generally easier to obtain and cheaper than other types of life insurance, particularly if you are younger and generally healthy.
- Permanent life insurance: As the name implies, permanent life insurance is a type of life insurance that lasts your entire life as long as you pay the premiums. It is more expensive than term life insurance, so it might not be the best option for everyone. Most types of permanent life insurance, such as whole life insurance or universal life insurance, offer a cash value component. The cash value builds over the course of the policy, and you may use these funds for any purpose, but any amount that is not paid back will be deducted from the death benefit. The funds grow tax-free, but you will have to pay taxes if you use the funds for something other than your death benefit.
- Guaranteed issue life insurance: Guaranteed issue life insurance might be one of the best life insurance options for those with mental health conditions. There is nearly-certain approval and no medical exam to qualify. However, the available death benefits are typically capped around $25,000-$50,000 and this type is often more expensive than other life insurance policies due to the lack of a health assessment.
- Group life insurance: Group life insurance is offered by employers through the workplace. While these policies are often inexpensive and easy to obtain, the included death benefit is typically fairly low. While obtaining more coverage is generally not as expensive as it might be with other policy types, you usually have to take a medical exam if you want a death benefit higher than a certain amount. There may also be tax implications, known as imputed income, if you purchase group life with a high death benefit amount. and if you want a higher death benefit, you may need to take a medical exam.
For people with depression, Prudential offers Prulife Focus, which has simplified underwriting and offers up to $50,000 in coverage. Lincoln Financial is the best choice for bipolar disorder. This insurance company accepts most mental illnesses, as long as they are properly documented and managed. For post traumatic stress disorder (PTSD), AIG offers guaranteed acceptance life insurance policies up to $25,000. Brighthouse Financial is the best choice for ADHD and other mental health conditions. The insurance company does not require a medical examination and accepts most pre-existing medical conditions.
What qualifies as a mental health condition?
According to the National Alliance on Mental Illness, a mental health condition is one that “affects a person’s thinking, feeling, behavior or mood.” Mental illness sufferers can oftentimes feel alone, yet 50% of lifetime mental health conditions present by age 14 and 75% by the age of 24.Being diagnosed and treated for any of the following mental health conditions could affect life insurance:
- Anxiety disorders
- Attention Deficit Hyperactivity Disorder (ADHD)
- Bipolar Disorder
- Borderline Personality Disorder (BPD)
- Dissociative Disorders
- Eating disorders
- Obsessive-Compulsive Disorder (OCD)
- Post-traumatic Stress Disorder (PTSD)
- Schizoaffective Disorder
How mental health impacts life insurance
When shopping for life insurance, both your mental and physical health will typically be evaluated. This is done initially by answering specific questions on the application. While question format varies by company, you can generally expect questions like:
- When were you diagnosed with your mental health condition?
- What severity is your mental health diagnosis (mild to severe)?
- Have you been hospitalized for a mental health condition in the last 12 months?
- What is the frequency of your episodes and when was the last one?
- Do your symptoms affect your ability to perform daily living tasks?
- Do you currently have a treatment plan and are you following it?
Certain mental health conditions that have a higher likelihood of suicide such as severe anxiety or depression, schizophrenia and OCD, may result in higher premiums than other mental illnesses.
Seeing a mental health professional may help increase your chances of being approved for life insurance at a better rate, especially if you are following the treatment plan, have not been hospitalized recently and have a consistent employment history.
How mental health history impact coverage
Although each application is evaluated on an individual basis, keep the following in mind to understand the impact mental health history could have on coverage eligibility:
|When coverage might be more expensive||When coverage might be denied|
|New or several past mental health-related hospitalizations||History of attempted suicide|
|Diagnosed with a mental health condition that has higher rates of suicide, such as anxiety or depression||You fail to disclose mental health treatments|
|Unable to work due to mental health conditions, such as depression||If you were hospitalized within the last year for mental health conditions|
Fortunately, it is possible to purchase life insurance after a mental health diagnosis. By following prescribed treatment plans and remaining under the care of a psychiatrist and physician, it is possible to improve your coverage classification. Maintaining a positive employment history is another way to improve chances of obtaining a policy or better premiums.
What happens if I lie about my mental health diagnosis?
You should never lie about anything on the application, including a mental health diagnosis. Life insurance underwriters use databases like the Medical Information Bureau (MIB) to confirm the medical history information you supplied. If it is found you lied on the application, it is considered insurance fraud and could carry serious consequences. Lying is also disclosed to the MIB, which can be found by other insurance companies if you apply for coverage in the future.
Most life policies, including term life insurance, have a two-year suicide clause. This clause is in place to prevent people from purchasing life insurance with the intent to commit suicide and have their family’s income protected. Companies may also include a contestability clause for the first two or three years of the policy.
This clause allows the company to investigate any death claim for misrepresentation. If it finds you lied on the application, your beneficiary may not get your death benefit. There is a chance they could get the premiums paid into the policy up to your death, but would lose out on the death benefit you paid for.