How does a diagnosis of depression affect the life insurance rates you qualify for?
Mental health is one of many factors life insurance companies consider when determining how much to charge for coverage. If you’ve been diagnosed with depression or a related mental health condition, you could end up paying more for life insurance.
The good news is that a depression diagnosis won’t automatically disqualify you from coverage. If your condition is mild and well-controlled with medication, it might not affect your life insurance premiums at all.
Still, every would-be life insurance policyholder needs to understand how depression affects life insurance rates before applying. Here’s what you need to know.
Can You Get Life Insurance if You Have Depression?
You can get life insurance if you have depression. However, it’s not guaranteed that you’ll qualify for the amount or type of life insurance you want.
Much depends on the specific circumstances of your condition and how it impacts your life. Expect to have difficulty qualifying for life insurance coverage if any of the following apply to you:
- Recent Hospitalization for Mental Illness. If you’ve been hospitalized for mental illness in the past year or two, insurers may see you as unacceptably risky. Examples of mental illness-related hospitalization include attempted or actual self-harm, panic attack, or psychosis.
- Inconsistent Treatment for Depression. If you don’t consistently treat your depression with medication or therapy, you’ll have trouble getting life insurance. Insurers review your medical records for mental illness diagnoses and prescriptions.
- Recent Documented Instances of Self-Harm. If you’ve been treated for self-harm, insurers will be hesitant to cover you, even if the incident was isolated and didn’t result in serious injury.
- Inability to Work Consistently. If your condition is debilitating enough that you’re unable to work consistently or drawing disability payments, you’re more likely to be denied coverage.
- Certain Mental Illness Diagnoses. Certain types of mental illness diagnoses are more concerning to insurers than others. If you’ve been diagnosed with serious, persistent conditions like psychotic depression or schizophrenia, affordable life insurance could be out of reach. Mild depression and less severe conditions like anxiety or dysthymia (“functional depression”) won’t impact your eligibility as much or at all.
In the worst-case scenario, your mental health condition could disqualify your application for standard term or permanent life insurance, but you’ll still have options:
- Guaranteed Issue Life Insurance: If you’re older, you’ll likely qualify for guaranteed issue life insurance. This is a lower-value policy designed to cover your final expenses and not much else. It’s much more expensive than term life insurance but could be useful if you don’t want to be a burden on your survivors.
- Employer-Sponsored Life Insurance: If you’re younger and your employer offers group life insurance, you’ll likely qualify even if your medical history raises red flags. Group life insurance is quite affordable but not particularly generous, and there’s a big catch: You’ll probably lose coverage if you change jobs.
How Depression Affects Life Insurance Rates
Like smoking and diabetes, life insurance companies consider depression a risk factor for premature death. That means people with depression are more expensive to insure — and pay higher premiums as a result.
Insurance underwriters look at a number of factors when they set life insurance premiums for people with depression.
You Initial Date of Diagnosis Matters
Your initial diagnosis date matters because it tells the insurer how long you’ve been experiencing mental health issues.
Being diagnosed with depression or other mental illness early in life isn’t necessarily a bad thing. In fact, if your condition has been stable and you’ve consistently pursued treatment, a longer history of mental illness could reassure your insurer. A more recent diagnosis means less data and more questions about how your condition might develop.
Your date of diagnosis is also important because it provides context around your condition. Insurers typically worry less about situational depression, such as postpartum depression and depression triggered by grief. If it’s well-treated, situational depression might not affect your life insurance rates at all.
Condition and Severity Will Be a Factor Too
When you apply for life insurance with depression, expect your insurer to ask for specifics around your diagnosis. They’ll check your medical records anyway, so it’s OK if you don’t know everything, but it’s important to be as honest and forthcoming as possible.
Your insurer wants to know the nature and severity of your mental illness. Mild depression and related conditions that tend to be less debilitating — like anxiety and dysthymia — raise fewer red flags than moderate or severe depression and certain mood or personality disorders: bipolar disorder, borderline personality disorder, schizophrenia, psychotic depression.
As part of this process, your insurer might ask questions like:
- What are the symptoms of your condition?
- When did your symptoms first appear?
- How have your symptoms changed since beginning treatment?
- Are you experiencing related mental health issues, such as substance use or alcohol use disorder?
- Have you ever attempted suicide?
- Have you experienced any acute episodes due to your condition, such as psychosis?
- Have you ever missed work or been unable to work due to your condition?
- Has your condition affected your ability to take care of yourself or participate in everyday activities?
Treatment Will Work Favorably for Your Rates
Your history of mental health care can dramatically affect your life insurance rates for better or worse. Your insurer wants reassurance that you’ve sought and are receiving consistent, high-quality care for your condition.
In practice, that means:
- You’re in therapy with a licensed psychologist or therapist
- You’ve been prescribed medication for your condition by a psychiatrist or primary care provider
- You’re consistently taking your medication
- Your medication history is relatively stable — you don’t frequently change medications or dosage
If you check these boxes, you’ll qualify for better life insurance rates than an otherwise identical applicant with untreated or poorly treated mental illness.
History of Hospitalization Is Not Necessarily Disqualifying
Being hospitalized for mental health reasons is concerning but not necessarily disqualifying for life insurance underwriters. If you have been hospitalized recently, your insurer will want to know:
- Whether the hospitalization was voluntary or involuntary
- The reason for hospitalization, such as a suicide attempt, panic attack, or dissociative episode
- How long you remained in the hospital
- How many times you’ve been hospitalized in the past
Your insurer won’t be overly concerned about a brief, isolated, and voluntary hospital stay, although even that’s likely to affect your life insurance rates. If you’ve been hospitalized multiple times or recently attempted suicide, you’ll be considered higher-risk and could be denied coverage.
How Depression and Related Mental Illnesses Affect Life Insurance Ratings
Depression is a life insurance risk factor, just like cancer and heart disease. But people with a family history of cancer or heart disease can qualify for affordable life insurance, especially if they’re young and otherwise healthy.
The same is true for people with depression.
Every life insurance applicant gets a life insurance rating or risk category. This is a measure of risk — basically, how likely the person is to die during the policy term if they’re applying for term life coverage, or how soon they can be expected to die if they’re applying for permanent life coverage.
The higher your rating, the lower your premiums. Here’s what you can expect if you’re applying for life insurance after a depression diagnosis:
- Preferred Plus: This risk category is reserved for applicants with clean family health histories, low-risk lifestyles, ideal height-weight ratios, and no known health conditions. Few people with depression qualify, but if your health history is otherwise perfect, you might be so lucky.
- Preferred: If you’re healthy and have no real red flags in your lifestyle or family health history, there’s a good chance you’ll qualify for Preferred status with mild, well-controlled depression or anxiety.
- Standard Plus: If you have a few blemishes on your personal or family health history but your depression is well-controlled, you’ll likely qualify for Standard Plus.
- Standard: If you’ve struggled to manage your depression or haven’t treated it consistently, you may qualify for a Standard rating. Alternatively, if your depression is well-controlled but you have other health or lifestyle risk factors, you’ll likely find yourself here.
- Table Rating: Also known as a Substandard rating, a table rating (typically A through J) suggests an elevated risk of premature death. If your mental health condition is associated with an elevated risk of death by suicide, you’ve been hospitalized recently, or your ability to work or care for yourself is limited, expect to find yourself here or to have your application denied altogether.
Lower ratings can get expensive quickly. Premiums for J-rated applicants — the most expensive to insure — are 225% higher than premiums for Standard-rated applicants.
5 Tips for Applying for Life Insurance With Depression
If you’ve been diagnosed with depression, anxiety, or any other mental health condition, don’t assume you won’t qualify for life insurance. You might end up paying a bit more, but chances are good you’ll find an insurer willing to write your policy.
That said, there’s much you can do to make the process easier, ensure you find a good rate, and minimize the risk that your beneficiaries get stiffed after your death.
1. Look for Friendly Insurers
Not all insurers treat applicants with depression equally. The best life insurance companies for people with depression won’t penalize applicants with mild, well-controlled depression or anxiety. If it’s not clear from the insurer’s website, don’t be afraid to ask how they assess mental health issues.
2. Be Honest About Your Health History
Don’t intentionally withhold health-related information from your would-be insurer.
This might as well be the golden rule of applying for life insurance. Insurance underwriters go to great lengths to learn about your medical history and past life insurance applications. If you’ve told a medical provider or insurance company about something in the past, chances are good they’ll find out.
That matters because even if your dishonesty earns you a lower premium now, it could harm your life insurance beneficiaries when you die. This is especially true if you die by suicide or in some other manner that may be correlated with an undisclosed mental health condition, like a drunk-driving crash. You can bet that your insurer will reopen your file and verify what you told them when you applied, and if there’s reason to believe you weren’t forthcoming, they could refuse to pay.
3. Document Medications and Therapy
Although you should expect your insurer to pull your medical records, don’t assume they’ll learn every relevant fact about your condition or course of treatment.
Make it easy for them by collecting and sharing as much about your mental health treatment as possible, including any medications you’ve taken and therapy you’ve received over the years. The more consistent your treatment appears, the less concerned your insurer is likely to be.
4. Look for Ways to Trim Your Life Insurance Costs
If you’re not fortunate enough to get a Preferred Plus or Preferred rating, look for compromises that might trim your life insurance costs.
That could mean applying for a term life insurance policy with a shorter term, such as 20 years instead of 30. It could mean lowering your death benefit to a less generous but still acceptable amount. Or it could mean opting for full medical underwriting rather than no-exam coverage. Any of these moves should reduce your premium.
5. Have a Backup Plan
Finally, plan for the worst: a denied application.
If the denial is due to a temporary issue, such as a recent attempt at self-harm or involuntary hospitalization, the result could be different if you wait a year or two and reapply.
Otherwise, consider life insurance options that don’t consider your mental health history. The go-to choice here is guaranteed issue life insurance — a type of whole life insurance policy that won’t deny your application for any medical reason, including mental health issues.
Managing depression — or any mental illness, for that matter — is a challenging, often lifelong enterprise. Anything that creates undue stress or complexity can interfere with the process — even one-off tasks like applying for life insurance.
Unfortunately, you might not have the luxury of saying “no” to life insurance. If your death would cause a financial burden for your partner, dependents, or close relatives, there’s a good chance you need life insurance. At least temporarily.
The silver lining is that you can probably qualify for life insurance even after a diagnosis of depression. You might even get the best available rates. You won’t know until you try.