Best life insurance for those with a mental health history

There are different types of life insurance, and some may be better options than others for those with mental health conditions. However, there are other factors that also play a significant role in determining your best choice for coverage — such as your budget and the length of time you need coverage for. Everyone's circumstances are different, so you may want to shop around before you settle on a policy type or carrier. You may also find it helpful to work with a licensed life insurance agent or broker who can answer your questions and help you find an insurer who is more likely to write you a policy despite any mental health challenges.

• Term life insurance: Term life insurance offers coverage for a set period, usually between 10 and 30 years. This type of coverage is generally cheaper than other types of life insurance, particularly if you are younger and generally healthy.
• Permanent life insurance: As the name implies, permanent life insurance is a type of life insurance that lasts your entire life as long as you pay the premiums. It is usually more expensive than term life insurance, so it might not be the best option for everyone. Permanent life insurance, such as whole life insurance or universal life insurance, offers a cash value component.
• Guaranteed issue life insurance: If you have been turned down for coverage previously, guaranteed issue life insurance might be one of the best life insurance options for those with mental health conditions to consider. You don’t need to complete any health questionnaires, and there is no medical exam. As long as you meet the age requirements (typically available to those aged 50 to 80), approval is guaranteed. However, the available death benefits are typically capped around $25,000. There is also often a waiting period of two years before your beneficiaries are eligible to receive the full death benefit.
• Group life insurance: Group life insurance is offered by employers through the workplace. These policies are often inexpensive and easy to obtain and generally do not require any medical underwriting to qualify. While obtaining coverage is generally easier than with other policy types, the policy only remains active for as long as you maintain employment with your company.

A mental health condition is one that “affects a person’s thinking, feeling, behavior or mood,” per NAMI. Those with a mental illness can oftentimes feel alone, yet it is estimated that one in five U.S. adults live with a mental illness. Although the mental health conditions considered by life insurance companies vary from carrier to carrier, if you have been diagnosed with any of the following mental health conditions, it may impact your premium and potentially your ability to purchase life insurance:

• Anxiety disorders
• Depression
• Attention Deficit Hyperactivity Disorder (ADHD)
• Bipolar Disorder
• Borderline Personality Disorder (BPD)
• Dissociative Disorders
• Eating disorders
• Obsessive-Compulsive Disorder (OCD)
• Post-traumatic Stress Disorder (PTSD)
• Psychosis
• Schizoaffective Disorder
• Schizophrenia

When shopping for life insurance, your overall health can impact your chances for approval and the price you pay. Depending on the carrier and type of life insurance policy, you may have to fill out a health questionnaire or participate in a medical exam. Insurers are also able to request your medical records for evaluation. Some common questions you may see on a questionnaire include:

• When were you diagnosed with your mental health condition?
• What severity is your mental health diagnosis (mild to severe)?
• Have you been hospitalized for a mental health condition in the last 12 months?
• What is the frequency of your episodes and when was the last one?
• Do your symptoms affect your ability to perform daily living tasks?
• Do you currently have a treatment plan and are you following it?

Certain mental health conditions that have a higher likelihood of suicide, such as severe anxiety or depression, schizophrenia and substance abuse, may result in higher premiums than other mental illnesses, lower coverage limits available or even application denial.

Seeing a mental health professional may help increase your chances of being approved for life insurance at a better rate, especially if you are following the treatment plan, have not been hospitalized recently and have a consistent employment history.

You should never lie about anything on the application, including a mental health diagnosis. Life insurance underwriters use databases like the Medical Information Bureau (MIB) to confirm the medical history information you supplied. If it is found you lied on the application, the underwriter will need to conduct an investigation to gather more information about the discrepancies found and it could lengthen the application process. You could also, in some cases, be charged with insurance fraud.

Most life policies, including term life insurance, have a two-year suicide clause. This clause is in place to prevent people from purchasing life insurance with the intent to commit suicide and have their family’s income protected.

In addition, your insurance policy will come with a contestability period, which typically lasts for two years after you purchase the coverage. This clause allows the company to investigate any death claim during that time for misrepresentation. If it finds you lied on the application, your beneficiary may not get the full death benefit you selected. They might get a reduced amount based on what your premiums would have qualified you for with accurate representation or they may only get the premiums paid into the policy up to your death.

Can I be denied life insurance due to mental health?

Yes, it is possible that an insurer may turn you down for coverage if it has determined that you pose too high a risk based on its statistics regarding others with similar pre-existing conditions. But every insurer uses its own proprietary policies and algorithms to determine who it will sell policies to, so even if you are turned down by one or two companies, that doesn't mean that others will do the same.

When looking for life insurance with mental health challenges, it can be important to shop around. Find a handful of likely companies and ask each one for quotes for the same levels and type of coverage. Don't be discouraged if you are turned down by any of them — you may be able to find the right carrier with diligent research. Working with an experienced life insurance broker may also be beneficial as they can shop around on your behalf.

If you have not found a traditional term or permanent policy that works for you, consider guaranteed issue life insurance. This type of coverage offers low levels (usually less than $50,000) of protection but does not require a medical exam or questionnaire. If you are in the workforce, you may also want to ask your human resources department if there is group life insurance available for employees.

Frequently asked questions