Life Insurance for People with Depression

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More than 17 million Americans experience depression in a given year. Depression can happen in isolation or it can coincide with other medical conditions and mental health disorders ranging from cancer and diabetes to substance misuse, bipolar disorder and anxiety.

Like other pre-existing conditions, depression can affect your ability to qualify for life insurance and your premiums if you’re approved for a policy. Here’s how.

Can you get life insurance when you have depression or anxiety?

It’s possible to get life insurance if you have depression or anxiety. However, these conditions may affect how much you pay for coverage.

In recent years, more medical research and information has become available about depression and how it can be effectively treated. That data gives insurance underwriters more information to assess risk. Insurers decide whether to insure you based on your risk profile.

For depression and anxiety, insurers will factor in:

Any complications related to these conditions
Whether your situation is under control with medication
Your overall medical history

They’ll then use this information to rate you. Lower ratings mean higher premiums.

Standard (or Regular) and Substandard are the lowest ratings in the insurance classification system. Super Preferred (or Preferred Plus) and Preferred are the highest ratings. People put into those classifications pay lower premiums.

The classification can mean you’ll pay hundreds more or hundreds less for a term life insurance policy each year. Here are the average annual premiums for a 20-year term life policy worth $250,000 for a 50-year-old nonsmoking man:

Preferred Plus — $881
Preferred — $978
Regular — $1,232

In some cases, an insurer may table rate people with pre-existing conditions. That means the insurer bases your premiums on pricing for the standard rating, plus 25%.

Anxiety and depression can affect rates, but it depends on the severity.

“If it’s a minor sort of depression or anxiety, then there are some carriers who will still offer the best Preferred Plus so long as the depression or anxiety is stable and well-controlled. The same applies for someone who may have a mild form of attention deficit hyperactivity disorder (ADHD) or obsessive-compulsive disorder (OCD),” says Jason Veirs, president and owner of Insurance Experts Solutions, Inc., a family-owned and operated independent broker.

Anxiety and depression can range in severity and the two disorders aren’t the same. Anxiety can include feeling stressed or worried, experiencing mood swings or feelings of anger or despair triggered by a specific event. These may or may not interfere with your day-to-day activities.

Depression occurs when depressive symptoms, such as feelings of sadness and hopelessness, last more than two weeks. This differs from an isolated episode, such as grief after a divorce, the death of a family member or work-related stress and anxiety.

Veirs says an isolated incident or depressive episode generally won’t affect your life insurance rates.

Whether you’ve been diagnosed with depression or anxiety, insurers typically collect your medical history as part of the life insurance application process. They’ll ask for information about your current medications, how long you’ve been taking them and at what dosage. You also may have to take a medical exam or answer questions during an in-person or phone interview. So, it’s important to be honest so the underwriters have complete information before they make their decision.

Instant approval and anxiety and depression

Term life insurance carriers may instantly approve consumers for a policy.

This process, which is called instant approval, involves an insurance company using data from your medical history to inform an algorithm that predicts your life expectancy and risk profile. Instant approval automates the insurance process and doesn’t involve any medical exams or extensive paperwork.

Though it’s possible to get instantly approved for a life insurance policy with some pre-existing conditions, insurers generally seek more information and will require medical underwriting for applicants with:

A history of anxiety or depression, especially if someone has been hospitalized as a result of these conditions
Someone taking medication or has been diagnosed with chronic depression or anxiety

For these reasons, it’s less likely that someone with diagnosed anxiety or depression will be instantly approved for a life insurance policy.

Simplified issue life insurance and depression and anxiety

If you can’t qualify for traditional life insurance coverage, simplified issue life insurance is an alternative.

With simplified issue insurance, you answer questions about your medical history instead of taking a medical exam. The benefit of this is that it increases your chances of getting coverage. The downside is that the policy will be more expensive than traditional coverage because the medical underwriting process isn’t as thorough and the insurer will take on more risk.

There’s another alternative, too.

“The final option would be to look into a guaranteed issue policy, which is typically a whole life policy that has a smaller death benefit — usually under $25,000. These policies also do not require medical underwriting, meaning they will accept anyone,” Veirs says.

Final expense insurance, also referred to as burial insurance, is one example of both simplified issue and guaranteed issue life insurance. Final expense insurance provides a cash payout to help cover funeral costs and other expenses.

The one drawback is that without medical underwriting, these policies provide lower coverage amounts for a higher premium. Still, final expense insurance may be a worthwhile option to give your family some form of insurance protection after you’re gone.

Getting life insurance with depression

Generally, it’s best not to wait to apply for life insurance if you have a pre-existing condition. As you get older, rates will only increase over time and you may experience other health issues that increase your risk to an insurer.

Veirs says those with mild depression or anxiety shouldn’t delay applying for life insurance, especially if their condition is under control with medication.

“If it’s a recent diagnosis of bipolar disorder or more severe depression, then the insurance carriers will typically want to see one to at least two years of documented stability and follow-ups within your medical records,” he says.

Even if you’re initially approved for life insurance coverage at a higher rate, you can ask your insurance company to review your rate and reclassify you one to two years after your policy began.

If you were initially rejected for life insurance coverage, you can always reapply later, especially if you’ve gone a long time without a recurrence of depressive symptoms or if your condition is now under control with new medication. If you improved your health over the last 12 months, it may be worthwhile to reapply.

Veirs says that it’s best not to navigate the life insurance process alone. Shop around with different insurers and compare prices to see if you can get an affordable policy.

“Since every situation is unique, it’s always very important to work with a knowledgeable independent broker who can understand the specifics of your particular situation, so that they can shop out your case to multiple underwriters and insurance carriers to obtain the best rate.”