How life insurance covers this mental disorder
IT'S a common myth that people who suffer from depression can’t get life cover. They can, and their premiums aren’t necessarily higher because of their illness.
Long-term insurance products for those suffering from depression tend to make use exclusions instead.
We explain what they are and how they’re applied.
BEFORE YOU SIGN UP
When you take out a policy you’ll be asked on the application form if you suffer or have suffered from depression, anxiety or stress, or if you’ve experienced problems with your nervous system or mental health.
Depression presents in a variety of ways and the insurance company has to determine the severity of your condition. By law you’re obligated to disclose such a condition to the insurer because it can influence the risk analysis and conditions of your cover, says Henk Meintjes of Liberty Life.
Insurers want to know:
▶ What your symptoms are ▶ What treatment you’re getting or have had ▶ Your doctor’s details. If applicable, you might also be asked for details regarding: ▶ Hospitalisation ▶ Incidents when you weren’t able to work because of the condition ▶ Any suicide attempts.
Based on your answers the insurer then determines how big the risk is that, for example, you might become unable to work due to depression.
Dave Ruiter of Venn-Sure Consulting says when depression is identified as a risk, most insurers make it an exclusion and don’t raise premiums because of it.
Exclusions are incidents not covered by your policy. They’re usually for conditions that are already present and could become a major risk for future cover.
Depression is usually excluded in disability cover. Dave explains there are two types of disability cover: single-amount disability and income protection.
With single-amount disability cover a cash amount is paid out if you become permanently disabled and therefore unable to work. Income-protection cover, on the other hand, pays out a monthly income if you became temporarily or permanently disabled.
Depression can render a person unable to work for long periods, and it’s usually an exclusion on both types of policies.
This means you can claim disability cover for any other reason, for example if you become paralysed in an accident and can’t do your work because of that, but not if you can’t work because of depression.
IT CAN BE REVIEWED
If there’s an exclusion on your policy due to depression it can be reviewed under certain circumstances, for instance if the depression was of a temporary nature or a reaction to a particular situation.
For example, if you were in a stressful work situation, if someone close to you died or if you suffered from postnatal depression. In other words, a scenario where you became depressed and received treatment but it wasn’t an ongoing condition.
If you apply for a policy during this time, the insurer could make the depression an exclusion. How long the exclusion continues depends on the policyholder’s condition or the insurer’s rules.
Sometimes the exclusion clause states that it’s subject to review in a year or two, but when there’s no such stipulation you can approach the insurer for a review at any time and the exclusion could be removed.
If one insurer excluded depression it will probably also be excluded by other insurers.
If you want to financially plan for times when you might not be able to work due to depression, consult a financial adviser. They can help you come up with a scheme like putting together a savings plan so you can cover your expenses if you’re not able to work.
You might also be able to take sick leave at work for short periods.
Depression isn’t usually an exclusion on life cover. It’s excluded probably only if a person has previously seriously injured themselves or attempted suicide due to depression.
When there’s too big a risk that the sufferer might commit suicide, life cover might be refused. Suicide is excluded for two years on life policies anyway. This means if the policyholder dies as a result of suicide within two years of taking out their life policy, their beneficiaries won’t receive a payout.
When applying for cover you must be totally honest. If you’ve suffered or suffer from depression, declare it.
If the insurer investigates your medical history and discovers you haven’t noted it, it’s regarded as nondisclosure.
This means the insurer could refuse to pay out based on nondisclosure, even if you’re claiming for something completely different.
Dave says insurance companies pay out the vast majority of claims. When there are delays it’s often because the claimant’s medical history was investigated and it was found that full disclosure about the person’s medical background wasn’t made.