According to Virginia-based insurance executive Courtney Rogers, a mental illness may affect your ability to get life insurance and the price you'll pay for it. Like any other illness, some mental illnesses have a statistical effect on how likely you are to die early. Ironically, and perhaps unfairly, the illnesses that increase mortality are the same ones that make it hard to get life insurance.
According to Rogers, insurance is a risk-based industry. Insurance companies hire actuaries, specially trained mathematicians who analyze statistics to determine how much risk an individual represents. Somebody with a history, habit or illness that makes them more likely to die represents a higher risk to the company. Insurance companies charge more for people who represent that risk. If somebody represents too high a risk, the company can refuse to insure him at all.
Some mental illnesses have no statistical link with early death, and thus won't necessarily affect an applicant's prospects for getting life insurance. Obsessive-compulsive disorder and attention deficit disorder are examples of this kind. Mental illnesses that have a profound statistical link with early mortality, such as severe depression or paranoid schizophrenia, often disqualify somebody for life insurance entirely. Some mental illnesses fall in the middle, and may or may not effect rates and eligibility, based on the severity and history of an individual case.
Another consideration is the medication an applicant takes to keep symptoms under control. Some medications, such as lithium, are themselves linked with early mortality and other health problems. This can lead to cases where an applicant is denied or charged a premium based not on his mental illness, but on the drugs that treat the illness.
A patient's medical history can have a profound effect on life insurance eligibility and rates. For example, somebody who has lived successfully with bipolar disorder can qualify where somebody with a history of multiple, frequent episodes would not. Time is a major factor in this decision, according to Rogers. The longer a patient has had success with the same course of treatment, the better her prospects are.
Guarantee of Insurability
It is illegal for an insurance company to cancel your policy or adjust your rates during your agreed upon term of insurance. This means if you are diagnosed with paranoid schizophrenia one year into a 10 year policy, the insurance company must cover you at the original rate for the next nine years. The "Guarantee of Insurability" rider is an option available on many policies. By paying extra each month, you lock in your eligibility at the end of term. This is often a good choice for people with a family history of mental illness who get insurance prior to any episodes.
If you have a disqualifying mental illness, group life insurance may be a viable option. Group insurance is negotiated with an insurance company by a large group, such as an employer, trade union or hobby club. In many group insurance contracts, the insurance company must cover all interested members of the group, regardless of their medical history. These policies are often comparatively small, generally enough to cover funeral expenses.
- Courtney Rogers, Insurance Executive, American Income Life, Richmond, Va.
- "Life Insurance and Its Applications"; Irena Kerr; 2001
- "Exam Cram: Life and Health"; Bisys Education; 2005