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Depression Life Insurance, Critical Illness Cover and Income Protection

The facts about getting life insurance with a history of Depression

Studies show that 1 in 5 people in the UK may suffer from depression at some point during their lives. With mental health issues such as depression and Bipolar Disorder currently on the rise, many insurers are open to applications for life and travel insurance from people who have suffered from poor mental health. Although it may be difficult answering questions about your mental health problems it is important that you are completely open and honest with your insurance broker. Applications for Depression Life Insurance, Critical illness Cover and Income Protection will take into account both your previous and current mental health conditions when assessing your risk of claim. Many sufferers of depression are able to find policies that suit their needs but you should be aware that you may find premium loading or a mental health exclusion added to your policy.

What does Depression Life Insurance cost?

If you have a history of depression and need Depression Life Insurance, Critical Illness Cover, or an Income Protection policy you should be aware that insurers may need some extra information regarding your medical history. Some questions you may be required to answer are:

  • When was your diagnosis?
  • Are you currently taking any medication to treat your depression?
  • Have you spoken a counsellor, psychiatrist or a community mental health team?
  • Have you ever harmed yourself or made any suicidal attempts?
  • Has your depression ever lead to you being admitted to hospital as an inpatient?
  • Have you ever needed time off from work due to your medical condition?

Your premiums for Depression Life insurance will also depend on:

  • Sum assured (£’s)
  • Term of cover (years)
  • Type of policy (e.g. Family, Mortgage, Whole of Life etc.)

Depression Life insurance rates/ratings

An application for Depression Life Insurance, Critical Illness Cover or Income Protection is often considered non-standard cover. Non-standard cover means that the insurance underwriters have identified additional risks to your cover and people with depression may be offered higher policy premiums as a result. Rates can vary dramatically from one provider to another depending on their underwriting guidelines. Insurance providers offer cover using a risk-based scale to determine the amount your cover will cost and may apply a ‘percentage loading’ or ‘£’s per mille loading’ to your premium.

Percentage (%) loading for Depression Life Insurance

Insurance providers apply percentage loading to policies when there are additional risks or claim. Underwriters will look at your current mental health problems and lifestyle when deciding the percentage that should be applied to your policy premiums. If your risk is considered too high or above the maximum level of loading your cover will be declined. Providers often have different maximum levels of loading making some providers more accessible for higher risk clients (e.g. 300% or 400%).

EXAMPLE:

Basic premium
% loading
Final premium
£20.00 50% £30.00
£20.00 100% £40.00
£20.00 150% £50.00
£20.00 200% £60.00
£20.00 250% £70.00

Per mille loadings for Depression Life Insurance

‘Per mille loading’ is far rarer and often only applied to very severe conditions such as Cancer. If you are offered policy premiums with ‘per mille loading’ an additional amount will be added to your premium that is based on the amount of cover applied for. For instance, your provider may choose to add £1 or £2 per thousand £’s of cover. Unlike percentage loading, ‘Per mille loading’ can be applied to your policy premiums on a full- or short-term basis.

Exclusions for Depression Life insurance, Critical Illness Cover or Income Protection

If you have a history of depression and have experienced severe symptoms it is possible insurers may request a mental health ‘exclusion’ be added to your policy. This could be added to a Depression Life Insurance, Critical Illness Cover or an Income Protection policy. This means that any mental health conditions or symptoms related to your mental health issues would not be considered on any claim. It may also affect your eligibility to receive additional benefits such as Total and Permanent Disability, Waiver of Premium or Guaranteed Insurability.

The amount of cover required varies from person to person and is entirely based upon your personal circumstances. If you are struggling to decide how much cover you may require, there are some simple questions you can use to make your decision.

When applying for any Depression Life Insurance, Critical Illness Cover or Income Protection policy you should be aware that your policy premiums may increase after underwriting. This reflects any additional risks of claim and could impact the affordability of your policy.

When discussing the amount of Depression Life Insurance you may need it is best to consider:

  • The amount left to pay on your mortgage.
  • Any outstanding debt (e.g. Loans, second charge, credit cards and other)
  • Dependants
  • Spouse or Partner
  • Annual Income (after Tax)
  • Any financial assets (e.g. car, house, business etc.)

If you feel unsure or require more information to decide how much cover you will require to secure your family and home, see our Iam insured life insurance calculator [LINK].

A Depression Critical Illness policy provides policy holders with a tax-free lump sum should you be diagnosed with a serious illness. Claims can be issued should you have to take time off work and could help to recoup loss of earnings or pay for treatment. When applying for Depression Critical Illness Cover, underwriters will look at the same information and details required for Depression Life Insurance. An Insurers ability to underwrite you can vary dramatically depending on the severity of your mental health condition. People with depression who have no recent instances of suicidal attempts or hospital admission are likely to be able to receive cover at standard terms with no exclusions. However, sufferers with more severe cases are likely to find premium loading applied to their policy premiums, mental health exclusions requested or even have their application for cover declined. As with any application for Critical Illness Cover it is important you fully consider your current financial circumstances. Some key factors to discuss when applying for Critical Illness Cover are:

  • Your annual Income (after Tax)
  • Mortgage/rental payments (annual)
  • Cost of living (annual)
  • Any other potential costs (e.g. medical treatment or adaptations)

An Income Protection policy provides strong protection for loss of earnings. As a Depression Income Protection policy holder, you will be able to claim should you have to take time off work and can claim multiple times across your policy term. Income Protection policies can be especially useful for people who are self employed or ineligible for full sick pay should the need arise. These policies are very flexible and can pay up 70% of a policy holders’ annual income (before tax). When searching for an Income Protection policy, people with depression are highly likely to receive loading on their policy premiums or a mental illness exclusion. However, if there has been some time since you have experienced any severe symptoms it is possible you may be offered a policy premium with standard terms. Some things to consider when taking out an income protection policy are:

  • Monthly income (after tax)
  • Mortgage/rent payments
  • Debts (other)
  • Cost of living

If you choose to accept a policy which includes a mental health condition exclusion, it is important that you are fully aware of what may or may not be covered under your policy. If you require any further advice regarding Income Protection policies for people with a history of depression you can contact a member of our team. We will be able to provide expert advice and help you decide if this type of policy will provide the best cover for your needs.

Depression can be a debilitating and harmful mental health condition, and the added stress of searching for a policy can take its toll on many sufferers. Luckily, most people with depression are likely to be able to receive cover at standard rates and more severe cases are handled respectfully. Although you may be affected by premium loading or exclusions on your policy, underwriters will take all details into account before deciding and many insurers will consider your application for Depression Life Insurance.

If you are finding the process difficult or stressful please consider speaking with one of our expert advisors. Here at Iam Insured we have over two decades of experience helping people with complicated mental health conditions find cover that works for them. Our experts can help make the process less stressful and provide any may advice you need.

Most insurers will consider you for a Depression Critical Illness Cover or Income Protection policy unless your case is very severe. When applying for a policy it is important that you aware that they may request an exclusion or premium loading and are knowledgeable about how this could affect your policy premiums.

These policies are incredibly valuable and can provide immense peace of mind should you need time off work. If you have previously been declined for Depression Critical Illness Cover or an Income Protection policy, it could be worth contacting a member of the Iam Insured team. Iam Insured are authorised and regulated by the Financial Conduct Authority and every one of our advisors can find the cover you need. Contact us now on [TELE] or [EMAIL].

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