Life Insurance and Depression

Life Insurance and Depression: Background
Can You Get Life Insurance with Depression?
Does Life Insurance Cover Depression?
Does Depression Affect Life Insurance Rates, and How?
What Life Insurance Types Can You Get with Depression?
What is best Life Insurance for Depression?

Life Insurance and Depression: Background

Depression is a mental health illness that has long-term effects on both physical and mental wellness if left untreated. When looking for insurance, know that depression is considered a pre-condition. The extent of the illness determines the decision to be offered a standard policy, a rated policy, or if you are declined. If depression is a serious issue, no medical life insurance policies are an option.

Depression is characterized by a very depressed mood; loss of enjoyment of life; loss of pleasure from activities you normally enjoy; isolation and occasionally, slowness/sluggishness, fatigue, crying, withdrawal from family, social interactions and thoughts of suicide. COVID has dramatically increased the already high depression rates in Canada.

According to the Survey on COVID and Mental Health (SCMH), current statistics show that 25 per cent of Canadians 18 and older suffer from either depression, anxiety, or PTSD. These numbers have risen from 21 per cent in the fall of 2020. Statistics Canada’s 2012 Canadian Community Health Survey (CCHS) on Mental Health shows that younger people also experience depression; 5.4 per cent aged 15 and over were categorized with a mood disorder, and that number includes 4.7 per cent with major depression and 1.5 per cent with bipolar disorder.

Very often, people with a history of depression can get life insurance, but the insurance company will try to understand your current condition and the probability of if it will get worse.

Can you Get Life Insurance with Depression?

Yes, you can get life insurance with depression and, depending on seriousness of your condition, there are several options available to you. Numerous factors will determine which life insurance policy you can qualify for:

  • Age at diagnosis
  • Severity
  • Any recurrence
  • Number of episodes
  • Date of last episode
  • Type of treatment
  • Any time off work or any hospitalization
  • Any suicide attempt or suicidal thoughts
  • Medication and or psychotherapy
  • Any suicidal thoughts, gestures or attempts
  • Any drug or alcohol use

If you were taking time off work at the time of application, you might be denied life insurance and considered for it at a later time (for example, a year).

If mild or moderate cases are identified within one year, you would be a good candidate for rated life insurance.

If your last incidents are more than a year back or there was only a mild episode, you might get standard rates.

When applying for life insurance, the underwriter is likely to reach out to your doctor for an APS – attending physician statement. This report provides insights to the insurer about your condition. The doctor provides it directly to the insurance company. If necessary, the insurance company may also ask for an additional questionnaire to be filled out and submitted with questions targeted to mental health and nervous disorders.

Does Life Insurance Cover Depression?

Yes, life insurance does cover depression and anxiety. Should an applicant have demonstrated only mild episodes that are more than one year back, standard rates may apply, similar to ones somebody without depression could get.

  • If a mild or moderate episode(s) is relatively recent, a rated insurance policy may be available. Costs of such insurance can be up to 150% of the standard price (150% rating).
  • If there was a serious episode, but it is more than one year back, some insurers offer life insurance but bump up the rates to 200% or event higher (200% rating).
  • If a depression-related episode was recent and requires you to take time off work or if you were hospitalized, most likely your insurance application will be denied until more time passes.

In those severe cases, you can still decide to go for one of the no medical life insurance policies, which come with some limitations. These either ask a very limited set of questions about your medical condition (simplified issue no medical life insurance) or do not have a questionnaire (guaranteed issue life insurance).

Does Depression Affect Life Insurance Rates, and How?

Most companies treat depression based on the severity of this health condition, last episode/date of reoccurrence, the need to get time of work or hospitalization. The more severe the condition, the higher the life insurance rates. In the most serious cases (e.g., after a suicide attempt or after being hospitalized) a standard life insurance application can be declined.

Here is an overview of how three insurers treat depression and anxiety in their underwriting.

Mild non-recent casesMild/moderate recent casesSevere recent cases including time off work / hospitalizations
Insurer AStandard rates may apply if the person has been in long- term remission, even if on medication (with no recent changes in dosage, etc.)Some people suffer from chronic mild depression and they’re often insurable, though often with a medical rating that will depend on the severity of the condition.When this condition is present for the first time insurance coverage usually isn’t available until the proposed insured is recovered for a minimum of six months.
Insurer BIf only one mild episode – could be standard.If multiple mild episodes or a moderate case, rating can reach 150%. If suicide attempt, rating willbe higher.If off work at time of application – decline with possible reconsideration in one year.
Insurer CFor mild/moderate cases, if over 1-year since diagnosis, may likely be standard risk.For mild/moderate cases, if diagnosed within 1-year, minimum rating of 150%.In all cases, if applicant is currently off work, we will postpone and may reconsider once the applicant has been working full time for a minimum period of 6 months.

All severe cases may be considered after 1 year from diagnosis with a minimum rating of 200%.

What Life Insurance Types Can You Get with Depression?

There are a variety of life insurance policies you can get with history of depression and anxiety.

Insurance TypeMedical ExamDetailed Medical QuestionnaireShort QuestionnaireCoverage LimitsImportant to Know
1. Traditional, Medically Underwritten Life Insurance with PREFERRED RATESYesYesNo $5,000,000+ Cannot apply.
2. Traditional, Medically Underwritten Life Insurance with STANDARD RATESYesYesNo$5,000,000+Possible with mild cases, which are more than one year back.
3. Traditional, Medically Underwritten Life Insurance WITHOUT A MEDICAL EXAMNoYesNo$5,000,000+Underwriting team will typically request an APS (Attending Physician Statement) to inform the final application decision. Some insurers would require completion of a mental/ nervous disorder questionnaire.
4. Traditional, Medically Underwritten RATED Life InsuranceYesYesNo$5,000,000+Yes, the most likely scenario for people with more recent (within one year) depression episodes which were mild or moderate. Ratings go up to 150%.

In some cases, severe cases after one year will be rated at 200% at a minimum.
5. Simplified Issue Life InsuranceNoNoYes$1,000,000Yes, can typically qualify for this insurance. Questionnaires will vary across providers.
6. Guaranteed Issued Life InsuranceNoNoNo$25,000Yes, you can always qualify for this one.

What is best Life Insurance for Depression?

Pretty much every life insurance company offers life insurance for people with depression, including Manulife, SSQ Life Insurance, Empire Life, Canada Life, Assumption Life and more.

If you are looking for a no medical life insurance policy for an applicant with depression, often Canadian Pension Plan or Assumption Life are a good choice.

We recommend working with an experienced life insurance broker who has access to most life insurance policies on the market and can compare depression-related application criteria across a wide variety of insurance companies to get you the best rate and coverage.

Our experienced life insurance brokers are happy to assist you on this journey – simply complete the quote request on the right side of your screen.

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