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Mental health life insurance should be fairer, as leading insurer softens its approach

Mental health life insurance should be fairer, as leading insurer softens its approach

Mar 10, 2023

If you experience issues with your mental health, you’re not alone.

According to the charity MIND, 1 in 4 people will experience a mental health problem of some kind each year in England. 1 in 6 people report experiencing a common mental health problem (like anxiety and depression) in any given week.

When it comes to putting protection such as life insurance, Critical Illness cover, and income protection in place, insurers will generally ask you some questions about mental health on your application.

While the majority of applicants for protection who disclose mental health conditions are offered cover, it can sometimes feel intrusive for you to answer a series of difficult queries about your history.

Now, a leading insurer has acknowledged it had asked “too many questions” to people who reveal mental health conditions, and that it intends to change its process and do more to support these customers.

Read on to find out more, and why you shouldn’t be concerned about applying for life insurance and other protection if you have to disclose mental health conditions.

People disclosing mental health conditions face increased premiums and reduced cover

Speaking at a recent Money and Mental Health Policy Institute event, Julie Higman, proposition manager at leading insurer Aviva, admitted there had been failings with mental health underwriting with insurers asking “too many questions”.

She said that the insurer had reviewed its own approach after the Institute’s mystery shopper exercise revealed people who disclosed mental health conditions faced:

  • Higher insurance premiums
  • Reduced cover
  • A refusal to provide cover.

The Institute, along with the consumer champion Martin Lewis, expressed serious concerns that insurers could be breaking the law and discriminating against people with mental health conditions.

They have called on the Financial Conduct Authority (FCA) to investigate whether insurance firms are making fair decisions regarding customers with mental health conditions.

While acknowledging there had been failings in the past, Higman said she personally wanted to “alleviate some of the concerns”, adding that customers can normally secure the protection they need even if they need to disclose a mental health condition.

Many customers feel like they are being unfairly judged

Emma, a member of Money and Mental Health’s research community, told the event that disclosing her condition of bipolar disorder led to policies that were “always more expensive”.

She urged insurers to reflect on how they address customers as she felt she was being unfairly “judged”.

Helen Undy, CEO of the Money and Mental Health Policy Institute pleaded with insurers to listen to the research and called for further action from them to put an end to the “historic injustices” that people with mental health conditions face across society.

Jakob Strandgaard, policy advisor at the Association of British Insurers, echoed this and said that insurers are expected to ensure they were asking “appropriate questions” when communicating with customers.

He added that it was encouraging that more than 4 in 5 ABI members reported they were regularly reviewing communication with customers, charities, and experts to make sure they have that “empathetic skill”.

An ABI spokesperson added: “No one should face a barrier to accessing financial services and our members recognise the importance of being able to offer accessible, affordable cover to as many people as possible. Clear communication and transparency around decision-making is crucial.”

All applications where mental health conditions are disclosed will now be “referred to a human being”

At present, 9 out of 10 people will be automatically accepted for insurance with Aviva. However, as part of their underwriting process, more information is normally needed if an applicant discloses a mental health condition.

Now, having changed their approach, any application where mental health conditions exist is “always going to be referred to a human being”.

The insurer has also confirmed that they have changed the specific questions they ask. Speaking to the recent event, Julie Higman said that Aviva were no longer “asking any of these ‘have you ever questions’” and that they will focus on adjusting their language, instead asking about “recent” medical history and the impact the condition has on the individual.

She added: “Everything that happens in life is going to affect people in different ways. We’re all individuals and that’s how I try to treat my customers. We know there’s going to be circumstances someone might have short-term problems with bereavement and that’s understandable.”

Aviva customers will now also have access to its Digi Care Plus app for wellbeing. Here, customers can book confidential mental health counselling, giving them access to support outside of a claim.

Customers lack of trust in insurers is part of the issue

Mark Jones, product director at Legal & General, also spoke at the recent Money and Mental Health event.

He believes that more needs to be done to address the level of non-disclosure – applicants not telling an insurer about mental health conditions – because of customer perceptions of insurers.

There remains a concern among many people that insurers will do whatever they can to avoid paying a claim – despite successful protection claims being above 90% – and that insurers simply won’t offer cover to someone who has disclosed such a condition.

Jones added that because of these perceptions, applicants may feel that they cannot be “entirely honest”, and this could only result in a bad outcome which would be “the worst possible position” for both the customer and insurer.

The truth is that the vast majority of customers who disclose mental health conditions will be accepted for the protection that they need.

In terms of applications for Legal & General, Jones said: “97% of all people who disclose any mental health conditions at application for life insurance, Critical Illness or income protection will be offered the product.”

We can help you to secure the protection you need

It is important to remember that you can get life insurance, Critical Illness cover or income protection if you have a mental health condition, or you have experienced an issue in the past.

Insurers are happy to consider applications from people who have experienced stress, anxiety, depression or other mental health conditions.

You must be honest in your application and disclose all mental health conditions. This might include:

  • Symptoms
  • Any diagnosis
  • Dates
  • Any medication or treatment you were prescribed.

Mental health conditions are protected by the UK Equality Act of 2010. This means it is illegal for insurers in the UK to discriminate against you if you have a mental health issue.

It’s worth remembering also that putting the right protection in place can actually boost your wellbeing and reduce your financial anxiety. You will benefit from the peace of mind that you and your family will receive crucial financial support when you really need it.

As life insurance experts, we work closely with dozens of the UK’s top insurers to help people who have mental health conditions to get the cover they need.

We can approach providers on your behalf to discuss your specific condition(s) and find the insurer who will offer the most beneficial terms for the life insurance, Critical Illness cover or income protection that you need.

The process is becoming easier and more sympathetic as insurers change their approach – as you read above. So, there’s no reason to be worried about what might happen if you disclose a condition on your application.

Read more about mental health and life insurance, or get in touch with one of our experts to have a discreet chat about your health and how we can help you.

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