Peace of mind if your mental health suffers

IN any given year one in four of us in the UK will struggle with our mental health.

Of these, according to the Association of British Insurers (ABI), around four million will also face associated financial troubles. If an individual is unable to work then how do they pay their bills?

Especially as the various state supports which kick in are typically only around the £100 a week mark.

Mental health conditions – the likes of stress, post-natal depression, ADHD, eating disorders, addictions, ME, fatigue, as well as depression and anxiety – might not be as easy to pin down as physical health issues, but insurers are increasingly recognising the need to provide cover.

So much so that in 2017, mental health was the most common cause of claims on income protection policies in the UK. Income protection policies, also known as permanent health insurance, are real ‘peace of mind’ products.

They ensure you continue to receive a regular income until you retire or are able to return to work.

In 2017 research by Legal & General found that employees in the UK had on average a 32-day deadline … and then the money runs out. That year Aviva paid out on more than 88.8 per cent of all individual protection claims, 4,707 in all, a total of £38 million.

You’re most likely to need protection if you are self-employed, or employed and you don’t have sick pay to fall back on. Check what your employer provides. Many people have 12 months income cover from their employer, but the money stops then. However, a policy can be set up to kick in at that point.

Taking out insurance may be inappropriate if you could survive on government benefits, you have enough savings to support yourself, you could take early retirement, or your partner or family would rally round.

How much you pay each month will depend on the policy and your circumstances, taking in such factors as age, job, whether you smoke or have previously smoked, the percentage of income you’d like to cover, the waiting period before the policy pays out, the range of illnesses and injuries covered, plus your current health, weight and family medical history.

There is no difference in any of the insurance decision-making processes for mental health to those for physical health.

Employees of company schemes or individual policy holders will usually be assessed rapidly, often within 48 hours, with a wide range of specialists including psychologists, counsellors and psychiatrists made available.

In addition, dedicated employee assistance programmes provide access to support services 24 hours a day on matters which may trigger stress or anxiety, such as finances, relationships and legal issues.

Policies often provide access to rehabilitation teams who help manage an employee’s or individual policy holder’s sickness absence, offering specific mental health pathways for people to get the tailored assistance they need.

As an example, insurance group AIG, cites the case of Sarah, aged 35 and self-employed, who becomes depressed and unable to work following a close family bereavement. Thankfully, she had previously taken out an income protection policy which included rehabilitation support. Her insurer provided a local counsellor to help her through the ordeal and she was soon back to her old self.

However, regardless of your age or health status, when taking out the policy you will need to front up, disclosing complete and accurate information, particularly as to whether you have previously been diagnosed with or treated for a mental health condition.

It’s a legal requirement that you answer honestly. Failure to do so may result in your policy being void.

Trevor Law is managing director of Eastcote Wealth Management, chartered financial planners,

based in Solihull. Email: tlaw@eastcotewealth.co.uk

The views expressed in this article should not be construed as financial advice