Ben Nguyen 
20% of Canadians will experience a mental illness during their lifetime (source). Despite the prevalence of mental health conditions, having a diagnosis can make obtaining affordable life insurance more difficult.
This extensive guide gives Canadians everything they need to apply for life insurance with a mental illness.
Overview of Mental Illness and Life Insurance in Canada
Mental illnesses are among the top causes of disability in Canada. The most common diagnoses include:
- Depression
- Anxiety disorders
- Bipolar disorder
- Schizophrenia
- Addiction disorders
- Eating disorders
- Post-traumatic stress disorder (PTSD)
However, mental health issues are considered pre-existing conditions by life insurance companies in Canada. This can lead to:
- Higher premiums : 50% to 200%+ above standard rates
- Coverage declines or exclusions related to mental health
- Delays during the application underwriting process
- Outright denial of traditional life insurance policies
Despite these potential obstacles, there are still options through “guaranteed issue” and “simplified issue” policies. Working with an experienced advisor can help navigate the complex process of getting insured with a mental disorder.
Impact of Mental Health Disorders on Life Insurance Eligibility
When applying for life insurance in Canada, the insurance company will ask extensive questions about your medical history, including:
- Any diagnoses, current or past
- The date you were first diagnosed
- Medications prescribed and their dosages
- Frequency and severity of symptoms
- Impact on your everyday functioning and ability to work
- Hospitalizations or suicide attempts
- Other co-occurring medical conditions
The insurer will collect medical records, lab results, and statements from your treating doctors to verify details. They use this health data to assess the mortality risk associated with insuring you.
For mental health conditions, increased severity, frequency of symptoms, and hospitalizations raise concerns around premature death risk. The more stable and well-managed your illness, the lower the risk rating.
Factors That Raise Risk Ratings
- Recent diagnosis or symptoms worsening
- Frequent hospitalizations
- Multiple medication changes
- Substance abuse co-occurring
- Suicide attempts or self-harm behaviours
- Significant impairment in daily living or employment
How Mental Disorders Affect Life Insurance Premiums
Insurers charge higher premiums to those deemed higher risk. With mental illness, premium increases compared to standard rates may be:
| Disorder | Premium Increase |
|---|---|
| Mild depression | +50% to 150% |
| Moderate depression | +50% to 150% |
| Severe depression | +50% to 200% |
| Mild anxiety | Standard to +50% |
| Moderate anxiety | +50% to 150% |
| Severe anxiety | +50% to 200% |
| Bipolar disorder | +50% to 200% |
| Schizophrenia | +100% to 300% |
| Eating disorders | +50% to 200% |
| PTSD | +50% to 200% |
| Addiction disorders | +100% to 300% |
These costs can be prohibitive for some families. Guaranteed issue policies provide an option for higher premiums but with guaranteed coverage, regardless of health.
Why Applications for Life Insurance with a Mental Illness May Be Declined
While most mental health disorders result in higher premiums, some severe or recent cases lead to outright declines. Reasons an insurer may reject a traditional life insurance application include:
- Recent suicide attempt(s) or self-harm behaviours
- Schizophrenia diagnosis within the past two years
- Hospitalization for mental illness within the past six months
- Concurrent substance abuse disorder exacerbating symptoms
- Severe impairment, including inability to live independently or hold a job
- Failure to follow medical advice and treatment plans
Even if declined for traditional coverage, guaranteed issue policies are still an option. Waiting 12-24 months until your health is more stable can also improve your chances for policy approval.
Types of Life Insurance with a Mental Illness
If you’ve been diagnosed with or treated for a mental health condition, there are three main insurance policy types to consider:
Traditional or Medically Underwritten Life Insurance with a Mental Illness
This is the most common type, involving a complete medical exam and review of your health records. You’ll be required to disclose your mental health history. Based on the severity, you may pay higher premiums or be declined.
Pros:
- Lower premiums than guaranteed issue options
- Up to $1 million+ in coverage
Cons:
- Risk of being declined coverage
- Premiums can be much higher, above standard rates
Guaranteed Issue Life Insurance with a Mental Illness
Guaranteed issue policies don’t require any medical exams or health questions. Approval is guaranteed regardless of health conditions.
Pros
- Guaranteed approval regardless of mental illness
- No medical exams or health questions
Cons:
- Maximum $25,000 benefit amount in Canada
- Premiums cost about 2-3 times more than traditional policies
Simplified Issue Life Insurance with a Mental Illness
Simplified issue life insurance involves answering a short health questionnaire but no medical exam. It’s designed for those with some manageable health conditions.
Pros:
- No medical exam
- Up to $500,000 in coverage
- Lower cost than guaranteed issue
Cons:
- Limited availability for severe mental illnesses
- Slightly higher premiums than traditional policies
What Does Life Insurance With a Mental Illness Cost in Canada?
The monthly premium costs for life insurance coverage with a history of mental illness can vary quite substantially depending on the type of policy:
Traditional Medically Underwritten Life Insurance
The monthly premium costs for traditional life insurance policies that involve medical underwriting are typically higher for applicants with a history of mental illness compared to healthy individuals.
Specific severe diagnoses like schizophrenia, bipolar disorder and major depression usually result in more significant premium increases versus more moderate conditions like mild anxiety or well-managed depression.
However, the exact amount an individual pays can vary greatly depending on the specific circumstances of their case, including severity of symptoms, hospitalization history, treatment compliance, and other factors assessed during underwriting.
For example, a healthy 30-year-old non-smoking male may pay around $30 per month for $500,000 in 20-year term life coverage. If that same individual has severe depression or bipolar disorder, they may pay $45-$90 per month for the same coverage due to their higher risk – equating to a +50% to 200% increase in cost.
Guaranteed Issue Life Insurance
With guaranteed issue life insurance policies that don’t require medical underwriting, approval is guaranteed regardless of health conditions. However, these policies do cost significantly more than regular medically underwritten coverage.
Guaranteed issue pricing is often 2-3 times higher than traditional policies for healthy applicants, given the increased risk the insurer takes on by not evaluating individual health histories.
Simplified Issue Life Insurance
Simplified issue life insurance involves answering a short health questionnaire but no medical exam. Pricing is typically a bit higher than traditional policies but lower than guaranteed issue.
For applicants with moderate, managed mental illness, simplified issue can provide a middle-ground option balancing cost and coverage amount.
Exact premium costs will depend heavily on the specific severity of your mental illness, related hospitalizations, medications prescribed, and other underwriting risk factors assessed by the insurance provider.
What Are The Potential Pros and Cons of Life Insurance With a Mental Illness?
Possible Advantages:
- Still able to obtain needed life insurance protection despite having a mental health condition
- Access to alternative guaranteed issue policies if declined for traditional medically underwritten coverage
- Ability to find policies tailored to your specific budget constraints and desired coverage levels
- Insurers may offer discounts for proper treatment and stability over time
Potential Disadvantages:
- Much higher monthly premium costs depending on the severity of the disorder – could be 2-6 times standard rates
- Lower maximum benefit amounts available with some guaranteed issue policies, usually around $25,000
- Potential for limited coverage exclusions or restrictions related to mental illness conditions
- Stricter eligibility requirements and waiting periods if mental illness is unstable or severe
While costs and limitations exist, having some form of life insurance protection is better than having no coverage at all for many Canadian families.
Sample Comparing Life Insurance with a Mental Illness
| Policy Type | Eligibility | Premium Cost | Max. Benefit | Application Process |
|---|---|---|---|---|
| Traditional | Health-based | +50% to 300% | Up to $1M | Medical history and exam |
| Guaranteed Issue | Guaranteed | More expensive | $15,000-$25,000 | No exam, basic questions |
| Simplified Issue | Moderate conditions | Slightly higher | $250,000-$500,000 | No exam, short questionnaire |
Those with milder, well-managed mental illness may qualify for traditional or simplified issue policies at reasonable rates. Severe cases usually require guaranteed issues.
Managing Mental Health To Improve Eligibility for Life Insurance With a Mental Illness
If denied coverage initially, taking steps to stabilize and improve your mental health can increase your chances for policy approval and lower premiums when reapplying down the road:
- Follow your treatment plan – Consistently take prescribed medications and attend therapy. Avoid discontinuing treatment against medical advice.
- Avoid drug/alcohol use – Substance abuse exacerbates mental health symptoms. Maintain sobriety.
- Improve overall wellness – Focus on proper nutrition, exercise, and sleep habits. Reduce stress where possible.
- Return to work – Steady employment demonstrates functioning and stability.
- Wait 12-24 months – Allow time for improvement before reapplying.
Ask your doctor to document your progress. Ongoing medical records showing the management of your illness are essential.
Best Companies for Life Insurance With a Mental Illness
Certain Canadian life insurance companies may be more accommodating to mental health conditions during underwriting. Top options include:
- Sun Life – Offers coverage for most disorders if well-controlled. Specializes in depression, anxiety, and ADD/ADHD policies.
- Canada Life – Competitive rates for common conditions like depression and anxiety. Also considers more severe illnesses.
- RBC Life – Will insure less severe mental illnesses. Requires stability before issuing addiction policies.
- Foresters Financial – Accommodating for common diagnoses like depression if symptoms are mild and controlled.
- SSQ Insurance – Will insure less severe mental health claims. Requires doctor’s statements confirming stability.
An experienced independent broker can provide quotes from multiple insurers to find you the best rate available.
How To Purchase Life Insurance With a Mental Illness
If you have been diagnosed with or treated for mental health disorders in the past, follow these recommended steps when purchasing life insurance:
- Consult extensively with a licensed life insurance advisor or agent to discuss your specific situation
- Gather all relevant medical records, mental health diagnosis details from doctors, and medication lists to provide
- Be prepared to fully disclose all aspects of your mental health history honestly during the application process
- Compare quotes from a wide range of highly rated life insurance providers in Canada
- Pick a policy option that best matches both your budget needs and desired level of coverage
Working closely with an experienced broker who is well-versed in high-risk underwriting can help guide you in properly navigating disclosures and finding the most suitable and cost-effective policy.
Where Should You Buy Life Insurance With a Mental Illness?
If you have been treated for mental health conditions in the past, you have several options for where to buy life insurance policies:
- Directly from insurance company websites or local agent offices
- Through independent life insurance brokers and advisors who can shop multiple companies
- Using online insurance policy marketplace websites to compare quotes
It is wise to shop quotes from 5-10 of the top national life insurance providers in Canada, as each insurer assesses mental illness claims history a bit differently.
- Consulting with an experienced independent broker is especially important for simplified issue and guaranteed issue policies, as specialized high-risk underwriting knowledge is key for those with mental disorders to successfully find coverage.
Questions to Ask When Applying for Life Insurance With a Mental Illness
When shopping for life insurance with a mental disorder, asking the right questions is critical:
- What underwriting approach is used for my specific diagnosis?
- Will you review medical records or also require an attending physician’s statement?
- How long must I be stable and symptom-free before reapplying if declined?
- Do you offer any policy riders to expand mental health coverage?
- What discounts are available to demonstrate proper treatment and control?
- What is the appeals process if I feel my application was unjustly denied?
Consequences of Non-Disclosure on a Life Insurance With a Mental Illness Application
It’s critical to fully disclose any mental health conditions when applying for life insurance. Failing to provide your complete medical history can be seen as fraud.
If the insurer later discovers you withheld mental illness treatment:
- Your coverage can be voided entirely.
- Claims may be denied/not paid out.
- Legal action could be taken to recover paid claims.
Even if coverage is not voided initially, undisclosed health issues often appear during claims investigations. Honesty is always the best approach when seeking life insurance.
In addition to Mental Illness, common pre-existing illnesses influencing life insurance include Autoimmune Diseases, High Cholesterol, High Blood Pressure, Lupus , and HIV/AIDS. For details on how to get life insurance with pre-existing conditions in Canada, see these useful resources:
- Life Insurance with Lung Disease in Canada
- Life Insurance with High Cholesterol
- Life Insurance with High Blood Pressure
- Life Insurance with Lupus
- Life Insurance with HIV/AIDS
- Life Insurance for Former Drug Users
How Family and Friends Can Guide the Life Insurance With a Mental Illness Process
For those struggling with severe mental illness, family members or close friends may need to help manage the insurance application process. Tips include:
- Research the person’s diagnosis and best life insurance options in their situation
- Gather the medical records, treatment plans, and prescription information
- Speak with doctors to get supporting documentation on stability
- Complete applications and health questionnaires on their behalf
- Pay premiums using a joint bank account or through power of attorney
- Provide extra support during difficult periods
While mental illness can make obtaining insurance challenging, supportive loved ones can help navigate the process successfully.
Alternative Options If Declined All Coverage for Life Insurance With a Mental Illness
For those unable to qualify for even guaranteed issue life insurance, some other potential options include:
- Employer group benefits – Some work policies don’t require medical underwriting. Maximum coverage is often limited.
- Final expense insurance – It covers funeral costs only but guaranteed approval.
- Accidental death insurance – Provides a limited death benefit if passing is accidental.
Joining an insurance-sharing program through specific associations or religious groups may also be an alternative for hard-to-insure individuals.
FAQs: Life Insurance with a Mental Illness in Canada
Does treatment or medication affect life insurance with a mental illness eligibility?
Insurers view ongoing medical treatment and properly managed medication regimens positively. They show that you are controlling your mental health. Documentation from your doctor about adherence can help secure more affordable premiums.
Can I get life insurance for a mental illness after a suicide attempt?
Yes, but a recent suicide attempt within the past two years will likely lead to policy declines until more time has passed. After 2-5 years, guaranteed issue policies are an option. Approval for traditional insurance may take 5+ years.
Can all life insurance companies access your medical records when applying for coverage with a mental illness in Canada?
Insurers can access centralized databases but need signed authorization to get actual medical records.
Are there any life insurance companies that do not require a medical exam for applicants life insurance with a mental illness in Canada?
Yes, guaranteed issue and simplified issue policies from some insurers don't require medical exams, just simplified health questionnaires.
What are the most common reasons for being denied life insurance with a mental illness in Canada?
Frequent suicide attempts, recent hospitalizations, severe impairment, drug/alcohol abuse, non-compliance with treatment, new diagnoses, disability claims.
Can you be denied life insurance with a mental illness in Canada after already being approved?
Yes, insurers can rescind policies within two years if an undisclosed mental health history constituting misrepresentation is discovered.
How does alcohol abuse affect your eligibility for life insurance with a mental illness in Canada?
Untreated alcohol abuse greatly reduces eligibility and increases premiums. Documented sobriety for 1-2 years can improve chances.
Can you apply for life insurance with a mental illness in Canada while on short-term disability?
It is very unlikely, as most insurers will postpone applications until you have returned to work fully.
Is genetic testing allowed by companies for applicants of life insurance with a mental illness in Canada?
Insurers cannot require genetic testing. However, self-initiated testing indicating mental illness risks may need to be disclosed.
Can life insurance companies access details of therapy sessions when applying for life insurance with a mental illness in Canada?
Insurers cannot access actual therapy notes without explicit authorization through a signed release form.
How long should you wait to reapply after being declined life insurance with a mental illness in Canada?
At least 6-12 months to improve mental health stability, which can greatly improve your odds of approval on reapplication.
Is it fraudulent not to disclose a past mental illness when applying for life insurance with a mental illness in Canada, even if recovered?
Yes, failing to disclose any past medical diagnosis or treatment, including resolved mental illness, can legally constitute fraud.
Can I qualify for life insurance with a mental illness in Canada if my condition is well-controlled?
Yes, if your mental illness is mild, well-controlled by treatment, and stable, you have a good chance of qualifying for coverage.
Will my life insurance with a mental illness application be delayed if I apply with an anxiety disorder in Canada?
It is possible there could be delays as the insurer gathers records to assess the severity and stability of your anxiety disorder.
Do life insurers in Canada offer any discounts on coverage for life insurance with a mental illness?
Some may provide discounts if you demonstrate consistent treatment and stability of your condition over a period of time.
What are my options if no life insurance company will approve me with a mental illness in Canada?
Look into final expense insurance, employer group benefits if available, or insurance associations/groups that don't underwrite.
Takeaway: Life Insurance is Accessible Despite Mental Illness
Mental health conditions are prevalent in Canada, affecting 20% of the population during their lifetime. While mental illness poses some challenges, appropriate life insurance is still accessible. Traditional policies, simplified issue plans, and guaranteed issues all provide options for coverage. Working with an expert advisor can help you navigate the process smoothly.
At Life Buzz, our goal is to help all Canadians gain access to life insurance to protect their families, regardless of medical history. Contact us, and we’ll find the right solution tailored to your unique situation and budget needs.
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