Last Updated on December 11, 2024
If you suffer from a mental health illness, you may still be able to obtain life insurance coverage. However, you may pay higher premiums as a result. This is not always the case, as anyone who has a history of diabetes, and mental health treatments will be evaluated on a case by case basis.
If you are the beneficiary of a life insurance policy, and the insured suffers from a mental illness, here is what you need to know.
Disclosing Mental Illness on the Life Insurance Application
Most insurance companies require new policyholders to complete an application and medical questionnaire. Why? Because factors that affect your health also affect your risk, or rather, the insurance company’s risk of loss.
An insured must disclose age, height, and weight, and also specific lifestyle choices such as alcohol or tobacco use and exercise habits. The questionnaire will have sections for the insured to note any past or present diseases or conditions affecting health, all medications taken, and whether he or she has had any surgeries or hospital stays. Mental health conditions such as attention-deficit disorder, anxiety, bipolar disorder, and clinical depression must also be disclosed.
Based on the insured’s answers to the medical questionnaire, the insurance company will place the insured in one of the following risk categories, listed from the least amount of risk to the most amount of risk:
- Super Preferred, or Preferred Plus
- Preferred
- Standard, or Regular
- Substandard
A person with any type of diabetes will never qualify for Super-Preferred rates. Less than 5 percent of all diabetes applicants will be eligible for Preferred rates. To be quite honest, usually the best case scenario will be a Standard rating when you have diabetes, in combination with any mental treatment history.
As we’ve mentioned several times throughout this website, life insurance with type 1 diabetes will almost always be a sub-standard rating. For those who were diagnosed with type 1 diabetes age 40 or older may have a chance for a standard rating.
If you are a person living with type 2 diabetes, then you’ll most likely be viewed as a slightly better risk compared to those with type 1 diabetes. We’ve seen well controlled applicants receive Standard ratings quite regularly. On a few occasions, we’ve gotten Preferred offers.
A mental health illness may or may not affect your risk category, depending upon its severity, whether it is controlled with medication or other therapies, and how it affects your ability to function in everyday life. Factors that may make it difficult for you to obtain life insurance at all include:
- You take multiple prescription medications;
- You have been hospitalized as a result of your mental illness;
- You have other health problems related to your mental illness, such as drug or alcohol abuse;
- You have attempted suicide.
In some cases, your mental health history may lead to a decline of coverage with companies. To determine what options you may have, we highly suggest you contact us, and speak with an agent to discuss your situation.
What Happens if I Don’t Disclose My Mental Health Condition on a Life Insurance Application?
You may be tempted to withhold information about your mental illness from the insurance company in order to pay lower premiums or to be able to obtain a policy at all. This is not advised, because the insurance company then has an excuse to deny your beneficiaries’ claims for the death benefits when you die. Do you want to pay premiums all those years only to have the insurance company refuse to payout?
When you answer health questions, you always want to be as honest as possible. Just as you would have to disclose your diabetes information on an application, you’ll need to do the same with your mental health history. Many policies require a review of your most recent medical records. Treatment would be in those medical records, so an Underwriter would find all this out.
Or if you are completing a non medical exam life insurance application, that doesn’t require any blood testing nor medical records, companies will still do a background review. These reviews include a prescription drug background check, and a Medical Information Bureau review. Bottom line is it will be hard to ‘get away’ with NOT disclosing your mental health treatment.
Your Beneficiaries’ Claim Could Be Denied Due to Misrepresentation
If you fail to disclose your mental illness and then die from something related to that illness, the insurance company will deny your beneficiaries’ claims for death benefits due to your misrepresentation about your mental health.
Your Beneficiaries’ Claim Could Be Denied During the Contestability Period
If you die during the two-year period following the date you take out your life insurance policy, the insurance company will likely deny your beneficiaries’ claims for death benefits even if the cause of death is wholly unrelated to your mental illness.
Why? Because during that two-year “contestability period” the insurer has heightened power to investigate your responses to the application and medical questionnaire, and if any errors or omissions are found, even if unrelated to the cause of death, it can and will deny claims for death benefits.
An experienced life insurance beneficiary attorney can help your beneficiaries negotiate with the insurer to perhaps deduct the amount you would have paid in premiums had the insurer known of your condition from the amount due in death benefits, and disperse the remainder to your beneficiaries.
If You Commit Suicide During the Contestability Period, Your Beneficiaries’ Claims Will be Denied
This is almost certain. As a matter of public policy, insurance companies have the power to deny claims for death benefits when an insured commits suicide during the two years following the date the policy is put into effect. This is to dissuade people from taking out life insurance with the intent to commit suicide.
I’m a Life Insurance Beneficiary and My Claim Was Denied Due to Mental Illness, What Can I Do?
The first order of business is to determine why the insurance company denied your claim for death benefits. The insurer is required to give you a reason for the denial, and once you know that reason you know how to fight back.
The Insured Died Within the 2-Year Contestability Period
If the insured died during the contestability period, it is highly likely the insurance company will deny your claim, regardless of the cause of death, if there is any error or omission on the initial application for life insurance and medical questionnaire.
An experienced life insurance beneficiary attorney can help you fight back, especially if the cause of death had nothing to do with the alleged error or omission. It is highly likely you can still get paid.
The Insured Failed to Disclose Mental Illness
If the insured failed to disclose mental illness but the cause of death was unrelated to the mental illness, it is likely you will be able to negotiate with the insurance company to deduct the amount the insured would have paid in premiums had the insurer known of the mental illness from the death benefit, and pay you the remainder.
If the insured died due to something related to the undisclosed mental illness, such as drug overdose, cirrhosis of the liver caused by alcohol abuse, or self-harm, you can still fight back. The insurance company must investigate and show that the mental illness was the cause of death, and may prefer to settle with you rather than incur the costs of investigation and litigation.
The Insured Committed Suicide
If the insured committed suicide within the contestability period, your claim for death benefits will be denied. Again, you can fight back, however, if the death certificate lists suicide as the cause of death it will be difficult to prevail and get paid.
If the insured committed suicide after the contestability period expired, you may be able to successfully fight a claim denial, especially if the insured disclosed his or her mental illness on the initial application and medical questionnaire. But if the insured failed to disclose any mental illness and then commits suicide, it may be that the insured did not know he or she suffered from mental illness.
There are ways to successfully fight the denial of your claim for death benefits. Contact an experienced life insurance attorney for help.
