Why mental health can cost you on your insurance and what to do about it
Mental health issues can make it more difficult and more expensive to get all types of insurance, but it's possible to find good quality cover for less.
Insurance is important when life doesn’t go to plan, and mental health conditions disrupt many lives.
One in four adults experience at least one mental health problem in any given year, according to the NHS.
Covid has only made matters worse.
Mental health and wellbeing among parents, for example, were hit particularly hard, with two in five (38%) saying it was worse than before than pandemic, according to research by insurer LV= and charity Family Action.
Insurers may be concerned because of the links between poor mental health and poor physical health which can lead to increased risk of accident, disability or early death.
Mental health conditions are therefore relevant to policies related to health and lifestyle, such as travel insurance, private medical insurance, income protection cover, critical illness insurance and life insurance.
Car insurance can also be affected if you suffer from something that could affect your ability to drive safely.
Medical conditions listed by the Driver and Vehicle Licensing Agency (DVLA) that may need declaring include anxiety, dementia, depression, bipolar disorder and schizophrenia.
Those with mental health issues are caught between a rock and a hard place.
It's vital to be honest and disclose medical conditions, but if the insurer views you as more likely to claim, they may hike up their prices, add exclusions to the policy or even refuse to cover you at all.
If you don’t ’fess up, the insurer could declare the policy void, and refuse to pay out if you claim.
You might see a premium increase if you needed more intervention than medication from a GP
Conditions that can affect different types of insurance policies go beyond anxiety and depression to include stress, fatigue, ME, eating disorders, addictions, post-natal depression and ADHD.
Some insurers may ask for details of all mental health episodes no matter when they occurred, especially for more serious incidents such as attempted suicide or in-patient treatment.
Others may only ask about the last five or ten years, so if your illness happened before then, you may not need to disclose it.
Many standard policies will just rule out cover for pre-existing medical conditions, which isn’t much help for example with travel cover, if you have a crisis while abroad and end up needing emergency medical treatment.
The impact on your price and cover will be driven by factors including which type of insurance you're applying for, what you suffered from, when, and how you were treated.
Dr Kathryn Knowles, from specialist protection insurance broker Cura, said: “For example with life insurance, insurers are aware that the most common conditions such as anxiety and depression are part and parcel of life.
“You might see a premium increase if you needed more intervention than medication from a GP. Increases are usually in multiples of 50%, so you might see an increase from £5 to £7.50 a month.
“However, for income protection and critical illness, some insurers might exclude claims related to depression and anxiety or increase the price.”
Premiums can double, triple or even quadruple.
How to cut costs
If you have mental health issues, you may need to pay extra for assorted forms of insurance, but there are ways to bring prices down.
1. Increase your excess
Agreeing to pay a larger excess – that is, the amount of money you must pay towards a claim – can bring down your premium for general insurance such as car and travel policies. However, only consider this if you could afford to pay the excess if necessary.
2. Push back the payout
With income protection cover, choosing to wait longer after being off work before the policy starts paying out can bring down the monthly cost. This might be an option if you have the savings to tide you over after any sick pay from work stops.
3. Compare quotes
It’s always worth getting quotes from different insurers, if you can. Different insurers can charge radically different amounts for similar cover or take different views on the risk caused by mental health conditions. Just be aware that the cheapest policy at first sight might become distinctly more expensive once you've answered health questions and gone through medical underwriting.
4. Get help from a specialist insurance broker
Shopping around for insurance can be difficult if mental health conditions make it harder to cope with phone calls, navigate lots of different application processes and disentangle the small print. It can also be demoralizing if multiple applications are turned down, without support to explain why or suggest alternatives. Instead, get someone else to do it for you. Consider using an insurance provider who specialises in cover for people with pre-existing mental health conditions. They can compare policies on your behalf, to find the most appropriate cover at a competitive price. They should also be trained to deal with vulnerable clients and should be set up to support preferences for applying by phone, email or online. Mental health charity Mind has a list of specialist insurers.
You can also search online for brokers specialising in different types of insurance ‘with medical conditions’ via The British Insurance Brokers’ Association (BIBA).
5. Look after yourself
Insurers may ask about what you're doing to maintain your mental health. Dr Knowles explained that if you're actively taking steps to lead a healthy lifestyle, such as doing yoga, cutting out alcohol, eating well and going out to walk the dog, it could impact your insurance.
6. Consider the cause
If there's a clear reason for your illness, such as depression after bereavement, divorce or giving birth, and you feel comfortable raising it, then some insurers might consider you lower risk and push down your premiums accordingly. However, there's no obligation to discuss the cause if it might be triggering.
7. Provide up to date info
Providing up-to-date information can help insurers to assess how likely you're to claim for cover such as life insurance, critical illness and income protection, for instance, and potentially reconcile them to reducing your premium. As such, most insurers will request access to your medical records from your GP. With this in mind, ask your GP to add the details of your mental health to your medical records to provide a clear picture of your condition or treatments. It’s worth ticking the box to say you would like to see a copy before it goes to the insurer. That way, if there are any errors, you can get them corrected before they cause problems with applications or future claims.
8. Accept an exclusion
If you apply for income protection with, for example, a history of anxiety or depression, claims for pre-existing mental illness will be excluded from most income protection policies – or come at a much higher cost. The insurer might then actually reduced the premium as you can’t access all claims areas. Emma Walker from life insurance brokers LifeSearch says: “Even with an exclusion for stress, anxiety or depression, an income protection policy would still be useful if for example you were off work due to breaking your leg.”
9. Review your policy in future
If you have been symptom-free for at least a year, it’s worth reviewing your policy with the help of a broker, to see if you can find cover for less. For less serious conditions, for example, some insurers will only ask about episodes in the last five years.
After that, you might be accepted on standard terms and lower prices.
3 things to do right now...
Always be honest about any medical conditions when applying for insurance. No point paying for a policy which might not pay out if you need to claim.
Consider getting expert help from an insurance provider who specialises in cover for people with pre-existing mental health conditions. Check out the list provided by MIND or search the BIBA directory.
If your condition has stabilised or you have been symptom free for at least a year, review your policies, as you may now be able to find insurance for less.
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Don’t forget that while you may think that this article is brilliant, it is intended for information purposes only and should not be mistaken for financial advice or recommendations.