Is Depression a Life Insurance Risk?

Policy applicants typically don’t realize that life insurers are as concerned with their mental health as they are their physical health. Life insurers sometimes view a history of depression, anxiety, and/or other mental illnesses as a risk factor. The reason for this is that almost all mental illnesses are associated with elevated mortality rates, which increases the likelihood that the insurer will have to pay out a claim. However, insurers do not view all types of depression as equally risky. Some people with a history of depression may still quality for the best life insurance rates if their illness met certain conditions. We’ll explain how life insurers evaluate depression as a risk in what follows.

Mortality Rates

The main concern of life insurers in issuing coverage to applicants with depression or a history of depression is that they will eventually commit suicide. Most life insurance policies must pay benefits after two years if the insured commits suicide. Considering that about 2%-9% of depressed patients commit suicide, life insurers’ concern is justified. If you have a suicide attempt in your past, you will probably not qualify for life insurance coverage for at least one to two years. In addition to the suicide risk depression represents, it also affects areas of the body like the cardiovascular system, which also increases the risk of death.

Types of Depression

Life insurers do not regard all forms of depression in the same way. For example, if you experienced a brief bout of depression, took medication, and responded well to treatment, there is a good chance you can still qualify for preferred life insurance rates. How successful your treatment was, whether psychotherapy or pharmacological interventions, is a critical factor in determining your life insurance risk. Life insurers are especially lenient with reactive depression, or depression that resulted from a stressful life event, such as a divorce or the death of a loved one. On the other hand, chronic depression that is unresponsive to treatment and unrelated to life events is usually more of a red flag for life insurers. If you’ve been hospitalized for depression in the past, you may have an especially hard time finding affordable coverage.

Finding Coverage with Depression

If you have or have had depression and need life insurance coverage, the best strategy is to be honest and open with your life insurer about your illness. Provide thorough records of your treatment up front and be candid about the nature of your depression. Your insurer will find out about the details of your illness one way or another, so be honest from the beginning. Don’t be afraid to provide your treatment records–an insurer is much more likely to provide reasonable rates after thoroughly reviewing records rather than having to guess at the severity of your depression.