Life Insurance Mental Health and Depression: How it Works

If you are living with a mental health condition like depression, you could still get life insurance cover. Learn how it works.
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If you have depression, post-traumatic stress disorder or another mental health condition, you could be concerned about how it affects your ability to secure life insurance. Can you get coverage and will your premiums be higher? Our legal guide examines how a mental health problem impacts life insurance and how you can overcome obstacles.

About Mental Health Conditions and Life Insurance

According to Australian Bureau of Statistics stats, about 20% of Aussies are living with a mental or behavioural disorder, which makes it a significant concern for life insurance providers. A mental health issue like depression or PTSD can profoundly impact someone’s everyday life, resulting in a life insurance claim.


Unfortunately, there has been a steady increase in mental health problems in Australia over the last ten years. This trend means life insurance companies face an increase in mental illness claims every year. Consequently, a policyholder’s mental health history will affect long-term risk assessment and coverage options. Furthermore, a mental health condition can:


• Limit your life insurance options
• Mean paying a higher premium
• Impact your ability to buy life cover

It is a myth that insurance companies won’t cover mental health issues. People living with a mental health condition can still find life insurance cover, but it may be more challenging to secure suitable cover.

A life insurance broker with with a client suffering from mental health conditions

How Mental Health History Affects Life Insurance Applications

A history of mental health problems often means paying a higher premium or denial of coverage during the life insurance application process. Typically, mental and physical health are assessed simultaneously and will determine insurance policy pricing and exclusions. In this situation, it’s best to be transparent with full disclosure of your entire mental health history, including past episodes.

In Australia, some insurers charge higher premiums for applicants diagnosed with mental health issues, and they usually do not offer non-standard cover for these conditions. If this is your situation, expect them to ask intrusive follow-up questions and restricted coverage options.

There are many life insurance companies in Australia, and some offer cover for mental illnesses, with differing terms and conditions. If you have a pre-existing condition, it’s worth taking the time to research your options.

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Disclosing Mental Health Conditions on Insurance Applications

It is essential to disclose your complete medical history when applying for life insurance, regardless of whether you buy income protection, TPD insurance, or a life policy. You must disclose all relevant details, including minor issues and past medical treatments. Failing to disclose mental health conditions can mean the insurer refuses to pay benefits.

Dishonesty or omitting important information on the application can directly affect your ability to have a successful psychological injury claim. Lying about a mental health diagnosis can result in reduced benefits or only the premiums paid being returned to your beneficiaries.

Types of Life Insurance for People with Mental Health Issues

When seeking an insurance policy that covers mental health conditions, it’s best to find one meant for that purpose. However, there are two types of policies with no medical examination required.

  1. Guaranteed Life insurance: usually has no medical examination requirements but low payout amounts.
  2. Group life insurance policy: typically available through a superannuation fund and easier to obtain as they often bypass medical underwriting.

What Insurers Consider When Assessing Applications

Insurers may request a personal medical attendance report (PMAR) to evaluate an applicant’s mental health status and history. Your treatment history, including therapies and medications, must be provided to insurance companies for accurate evaluation. Satisfying this requirement helps avoid complications when you (or your dependents) make an insurance claim later. Next, an insurance company will:

  1. Evaluate the severity of current mental health conditions, such as depression, when determining premium rates.
  2. Make blanket assumptions regarding mental health risks based on past treatment without considering the severity of the conditions.
  3. Consider the applicant’s family medical history and lifestyle factors when evaluating risk.

The assessment process for life insurance cover is on a case-by-case basis. Knowing the factors insurers consider can help improve your chances of approval.

A depressed woman with mental health challenges lying on the floor

How to Improve Your Chance Approval

Here’s how you can improve your chance of successfully accessing life insurance cover:

  1. Show medical records demonstrating consistent mental health treatment with no recent hospital stays
  2. Proof of a stable employment history is a positive indicator for life insurance applications.
  3. Before applying for life insurance, you should collate relevant medical and lifestyle history documents.

History shows that you can increase your chances of getting coverage by being open and honest about your mental health condition and by finding the right insurer.

What to Do If Your Application Is Denied

There are three steps if your insurance application is denied:

  1. Challenge the decision
  2. Seek advice
  3. Or lodge a complaint

If you feel a life insurance provider has treated you unfairly because of a mental health condition, first ask for an explanation regarding their decision, then consider making a formal complaint. You could also get quotes from other insurers until you find your best life insurance provider.

Ultimately, you can escalate your case to the Australian Financial Complaints Authority within six months of being refused coverage. NOTE: In Australia, discrimination against someone with a mental illness in insurance is illegal, but there are some exemptions.

More about rejected insurance claims >

Protecting Yourself from Unfair Exclusions

Before a life insurance provider issues a policy, they will use your medical information to assess your chance of making a future life insurance claim. Based on this data, they will charge a higher premium, or have exclusions in the terms and conditions, or both.

Insurers can also have blanket exclusions for mental health issues even if treatment occurred long ago. A single mental health episode can lead insurers to impose broad exclusions on policies, which sometimes affect unrelated claims.

Insurers often ask general questions about medical history, making it crucial for applicants to remember past mental health issues. If you have a history of mental illness, it is best to look for an insurance company that will cover it, even if it means paying a higher premium.

Mental Health Life Insurance Legal Advice

Are you living with a mental illness, and your life cover is refusing to payout? If a mental health condition stops you from working and you are struggling to pay the bills, you could:

Protect your family’s financial future and mental well-being by contacting Aussie Injury Lawyers for free legal advice. Our experienced insurance claim lawyers will explain your options and investigate your claim options at no charge. Should you decide to proceed, all our legal services are 100% no win, no fee with a fixed or capped upfront price. Pay when you win and zero if you lose. Call Now: 1300 873 252

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Mental Illness Life Cover FAQs

Can I get life insurance if I have a mental health condition?

Yes, people living with a mental health condition can buy life insurance, but you must be honest about your mental health history and try to find insurers that provide equal coverage.

How does my mental health history affect my life insurance application?

When applying for life insurance, a history of mental illness can mean either higher premiums or denied coverage. Australian insurers typically assess mental and physical health factors, treatment history and condition severity to decide their level of risk.

What are the common reasons for the denial of mental health claims?

Mental health claims are commonly denied due to broad exclusions for mental health issues, failure to disclose relevant mental health history, and not meeting specific claim criteria. To have a successful claim, you must have a comprehensive understanding of your policy terms and conditions or seek free legal advice from Aussie Injury Lawyers.

Are there additional benefits available for mental health conditions with life insurance?

Yes, some life insurance plans provide additional benefits for mental health conditions, such as wellness programs and counselling services, often at no extra cost.

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