Kyle Moore, an advocate promoting awareness of mental health concerns, in Halifax, on May 16.Darren Calabrese/The Globe and Mail
Concerns Surrounding Life Insurance Accessibility
Kyle Moore is not actively looking for life insurance, yet he is concerned about what might happen if he ever finds himself in need of it. Based in Halifax, Moore leads efforts related to mental health at the League of Innovators, an organization dedicated to fostering entrepreneurial talent. He has personally overcome various mental health challenges in the past.
Insurance professionals, including brokers and disability lawyers, indicate that individuals prescribed medication or undergoing therapy for mental health issues—even those considered mild—may face denial of private life insurance coverage or be subjected to significantly higher premiums. This practice is profoundly disheartening for Moore.
Moore expresses concern regarding the tendency of insurers to categorize individuals on mental health medications in a way that limits or denies their access to life insurance. “It’s disheartening to discover that being on mental health medication is often a red flag that can lead to denial or restricted options,” he notes. This situation leaves many Canadians unaware of the challenges they might encounter when seeking life insurance after addressing their mental health needs.
Navigating the Life Insurance Landscape
For Canadians who have pursued mental health treatment, understanding the potential obstacles to securing life insurance can be daunting. However, certain strategies may help mitigate these challenges. Key steps include ensuring medical stability—meaning no changes in prescriptions or conditions—working with knowledgeable brokers, exploring simplified or guaranteed life insurance options, and thoroughly shopping around for the best options.
Many individuals may not realize that the vast majority of those who apply for life insurance with a history of mental health issues are actually successful in securing some form of coverage. Insurance representatives indicate that while severe, untreated mental health conditions such as schizophrenia or borderline personality disorder may result in denials, many applicants still manage to find suitable options.
<pKaren Cutler, a vice-president at Manulife Financial, emphasizes that a significant percentage—between 85 to 90 percent—of applicants with mental health histories are able to obtain coverage. While applicants may feel uncertain about their insurability, Cutler advises them to apply, noting that most individuals will qualify for some type of coverage.
The Complexity of Mental Health Evaluations
Interestingly, mental health is not evaluated in isolation when underwriters determine eligibility for life insurance coverage. Other factors such as overall health, lifestyle habits, and age are also taken into consideration. This holistic assessment underscores the importance of looking beyond just mental health when applying for insurance.
Unfortunately, some individuals with mental health issues may still find themselves falling through the cracks, according to legal experts like Courtney Mulqueen, who frequently witnesses this phenomenon in her practice. She advocates for a more nuanced approach to underwriting that differentiates between severe mental health conditions and less severe issues, arguing that this would ultimately make business sense.
Assessing Life Insurance Options
A significant number of Canadians obtain life insurance through their workplace benefits, while others choose to purchase various types of coverage either guaranteed or simplified. The cost of premiums is influenced by personal factors such as age and lifestyle choices. For example, a healthy, non-smoking 30-year-old male might pay around $30 monthly for a $500,000 20-year term life policy. However, individuals with mental health struggles could face premiums that are anywhere from 50 to 300 percent higher.
Given such significant potential differences in cost, individuals with mental health histories need to approach life insurance applications with thoughtful planning, much like one might consider a mortgage pre-approval. Moore notes that a single denial can adversely affect an applicant’s record, as insurers typically share these records among each other, potentially complicating future applications.
To improve chances of approval, experts suggest allowing at least 12 months to pass since the last treatment for any mental health issues. Additionally, consulting with multiple insurers is crucial. Consumers are encouraged to connect with at least three different insurance agents or companies to find the most suitable options tailored to their unique circumstances.
Independent insurance brokers are particularly beneficial, as they can identify which insurers may be more accommodating to individuals with mental health challenges. These brokers can also conduct preliminary assessments for applicants, allowing an evaluation of the likelihood of approval without any adverse records being created.
Insurance Products Tailored to Mental Health Needs
For clients who have experienced mental health issues, applying for simplified life insurance—an option requiring fewer medical inquiries compared to traditional fully underwritten plans—can be effective, despite potentially resulting in slightly higher premiums. In more complex situations, guaranteed life insurance may be available that requires minimal personal information and no health questions, although it tends to come with higher costs and lower coverage amounts.
Moore feels it’s unjust that individuals are forced to accept reduced or more expensive coverage due to their mental health histories. He advocates for a reevaluation of how insurers consider mental health conditions, emphasizing that many applicants are just seeking to express their vulnerabilities in an effort to secure support.
“People should not be penalized for their past struggles,” Moore states. This sentiment forms a foundational belief that accessibility to life insurance should reflect a more compassionate understanding of mental health, thus allowing individuals to secure the coverage they need without undue burden.
Overall, while challenges remain for those navigating the complexities of securing life insurance following mental health treatment, there are effective strategies and support mechanisms available for individuals. The landscape is slowly evolving, and with continued advocacy, positive changes can lead to a more inclusive approach to life insurance underwriting.
