Life Insurance with Depression in Canada: Everything You Should Know

Depression is one of the most prevalent mental health conditions in Canada. Despite its frequency, depression can significantly impact your ability to qualify for life insurance if left untreated or if the episodes are severe.

This guide examines how depression affects life insurance in Canada, provides tips and strategies for finding affordable life insurance with depression in Canada, and equips you with expert insights to secure the protection you need.

What is Depression?

To evaluate how depression may affect life insurance eligibility and premiums, it is essential first to understand the condition itself and its prevalence across the Canadian population.

Defining Depression

Depression is a mood disorder characterized by persistent feelings of sadness, hopelessness, and loss of interest in everyday activities. It can range in severity from mild to moderate to severe. Key symptoms include:

• Depressed mood most of the day
• Diminished interest in hobbies and activities
• Significant weight loss or gain
• Fatigue and loss of energy
• Excessive feelings of guilt or worthlessness
• Difficulty concentrating and making decisions
• Recurrent thoughts of death or suicide

Prevalence of Depression in Canada

Depression is widespread among the Canadian population. According to Statistics Canada, the following percentages of Canadians have experienced depression:

• 7.6% of Canadians had a major depressive episode in 2022. (Source: https://www150.statcan.gc.ca/n1/pub/11-627-m/11-627-m2023053-eng.htm)
• One in four (25%) of Canadians have experienced depression, anxiety or posttraumatic stress disorder (PTSD) amid the COVID-19 pandemic. (Source: https://www150.statcan.gc.ca/n1/daily-quotidien/210927/dq210927a-eng.htm)
• Women are diagnosed with depression almost twice as common as men.
• Canadians aged 18-24 have the highest rates of depression. (Source: https://www150.statcan.gc.ca/n1/en/pub/82-003-x/1995004/article/2816-eng.pdf?st=oP1rknpc)

While depression is widespread, severity and consistency of treatment are critical factors evaluated by insurers. With proper management, many people with depression go on to live healthy and productive lives. However, untreated or uncontrolled depression can negatively impact life expectancy, a critical factor in underwriting.

How Insurers Evaluate Applicants for Life Insurance with Depression

When reviewing life insurance applications, insurers evaluate dozens of health and lifestyle criteria to determine risk and set appropriate premiums. For applicants with a history of depression, some key factors considered are:

Severity of Depressive Episodes

Insurers want to understand the severity of your depressive episodes to gauge risks. Common categorizations are:

• Mild depression – Typically treated with counselling and a single medication. Often still eligible for standard or mildly rated policies.
• Moderate depression – May involve multiple medications and psychiatrist care. It is likely to get a moderately rated policy.
• Severe depression – Hospitalization or suicide attempts. Much higher ratings or denial are likely.

Frequency of Episodes

Underwriters will inquire about the recurrence of major depressive episodes you’ve experienced. Infrequent episodes generally pose less concern than frequent or seasonal bouts of major depression. Illustrating that your condition is not chronic can help improve your risk profile.

Recent Occurrence

Much more weight is placed on recent mental health diagnoses and symptoms versus those further in the past. If your last depressive episode was years ago, be sure to highlight the duration since the condition has persisted.

Treatment Type

Insurers look favourably at applicants who demonstrate commitment to effective management of depression through counselling, medication adherence, psychiatric treatment, and lifestyle changes. Seeking treatment can help secure better rate classes than unmanaged depression.

Time Off Work and Hospitalizations

Any extended time off work or hospitalizations due to uncontrolled depression symptoms raises red flags for underwriters. These signal that your depression interferes with everyday life activities and relationships. Avoiding drastic impacts on work/life is ideal.

Suicidal Thoughts and Attempts

Current or past suicidal ideation and attempts due to depression can severely hamper life insurance eligibility. Be prepared to provide records showing the stability of your mental health over time if these factors are present.

Co-existing Conditions

It is common for depression to co-occur alongside other conditions like anxiety, PTSD, substance abuse, diabetes, or cardiovascular disease. The combination of multiple risk factors complicates underwriting. Managing all aspects of health is critical.

So, in summary, the milder, less frequent, and more controlled your depression, the better chance you have of qualifying for a standard or moderately rated policy vs. a high rating or declination.

Types of Life Insurance for Depression in Canada

There are several main types of individual life insurance policies available to Canadians with depression:

Term Life Insurance for Depression

• Provides temporary coverage for a set period of time, usually 10, 20 or 30 years.
• Premiums remain level over the term and only cover the specific term period.
• Typically, it is a lower-cost option compared to permanent life insurance.
• The policy terminates (“expires”) at the end of the term period.
• Well-suited for covering temporary needs like mortgages, child-rearing costs, or income replacement.

Read more : how does term life insurance work in Canada

Whole Life Insurance for Depression

• Provides permanent lifelong insurance coverage.
• Premiums generally remain fixed over the entire life of the policy.
• Builds cash value that grows on a tax-deferred basis.
• The cash value can be borrowed in the future if needed.
• It functions as both lifelong protection and a savings/investment vehicle.
• It is suited for permanent family protection or estate planning.

Read more: Type of whole life insurance in Canada

Universal Life Insurance for Depression

• It also provides permanent lifelong coverage like whole life.
• Features adjustable premium payments and death benefit amounts over time.
• Enables customization of cost and coverage as needs change.
• Cash value accumulation features similar to whole life.
• Combines flexibility on premiums with lifelong protection.
• Helpful in changing long-term needs or unpredictable income.

Read more: Universal Life Insurance Cost in Canada?

Guaranteed Issue Life Insurance for Depression

• Policies that provide coverage without extensive medical underwriting.
• Applicant answers simplified health questions, but approval is guaranteed.
• Maximum death benefit amounts are generally low ($25k range).
• Premiums are substantially higher than underwritten policies.
• It provides an option if you cannot qualify for other life insurance types.

Cost of Life Insurance with Depression in Canada

The cost of life insurance for Canadians with depression depends heavily on the severity of one’s condition:

• Mild Depression: Often still eligible for standard rate underwritten policies with preferred premiums.
• Moderate Depression patients may receive ratings of 50-100% over standard premium costs. The actual rating depends on frequency, treatments, etc.
• Severe Depression: can experience ratings of 150-200%+ compared to healthy applicants based on the extent of hospitalizations, symptoms, and disability.
• Guaranteed Issue Policies: Higher premiums than underwritten policies across the board but guaranteed approval.

Other factors influencing rates include stability of condition, consistency of treatments, co-existing conditions, and lifestyle factors. Comparing quotes across multiple Canadian insurers can uncover significant savings.

Pros and Cons of Life Insurance with Depression

Potential Advantages of Life Insurance with Depression

• Obtain individual life insurance coverage despite having a depression diagnosis.
• Lock in lower premiums while health is stable before the condition potentially worsens.
• Avoid future insurance eligibility issues, or rating increases if depression becomes severe later on.

Potential Disadvantages of Life Insurance with Depression

• Higher premium costs compared to applicants without a depression history.
• Potential for limited benefit payouts related to mental health claims.
• Need to disclose private mental health diagnosis history.

Applying for Life Insurance with Depression in Canada

When applying for life insurance with depression, there are a few things to expect regarding the information you’ll need to provide.

Medical Questionnaires

Life insurance medical questionnaires will ask you to disclose any diagnosis of depression, along with details like the date of diagnosis, medications prescribed, hospitalizations, and healthcare providers.

Answer these questions honestly. Nondisclosure can allow insurers to deny claims later on if relevant information is found.

Medical Record Requests

It is standard practice for insurers to request medical records from any mental health professionals you see for depression treatment.

This usually involves signing a release form to allow your psychiatrist, therapist, etc., to share your medical history with the insurance company’s underwriting department.

While intrusive, this allows insurers to verify and evaluate the severity of your condition based on clinical notes.

Attending Physician Statements (APS)

An Attending Physician Statement (APS) is a report your doctor provides to the insurer summarizing your health history and treatment.

The APS provides details such as the diagnosis date, symptoms, hospitalizations, medications, prognoses, and impact on life activities.

Your consent is required to have your doctor complete an APS. These reports give underwriters a clinical perspective on the stability of your depression.

The application process for life insurance with depression often involves disclosing more personal health details than applications for physical conditions. While rigorous, sharing pertinent information about your mental health helps insurers properly underwrite and rate policies based on your situation.

Optimizing Your Application for Life Insurance with Depression

Given the heavy focus insurers place on mental health, maximizing your chances of approval involves strategic timing and preparation for your depression treatment.

Time Applications Strategically

Ideally, apply for life insurance during periods when your depression is well-controlled through medication, counselling, or other therapies. Avoid times when you are adjusting to new treatments or are in the midst of a major depressive episode. Stability is key.

Optimize Health First

Get annual check-ups with your doctor and be diligent about screenings, medications, and lifestyle changes recommended to keep depression in check. The healthier you are, the better your chances of preferred rates.

Gather Details About Your Depression History

Insurers will want detailed records of your mental health treatment over the years. Check with your doctors for complete medical records, including therapy notes, for the underwriting process.

Ask Your Doctor to Highlight the Stability

Talk to your physician about the importance of emphasizing your commitment to treatment and any extended periods of depression stability/remission in the APS and other reports to insurers. This provides a balance to disclose any severe episodes.

Consider Group Life Insurance First

If your employer offers group life insurance, the coverage options and underwriting tend to be more lenient than individual policies. Try to maximize this route first before seeking individual coverage.

Taking these proactive steps enables you to present insurers with a complete picture of your depression history and treatment. With preparation, you can often improve risk profiles by being thorough.

Comparing Insurers for Life Insurance with Depression Underwriting

While many factors related to your depression history influence life insurance eligibility, it is also critical to compare how different insurers view depression in their underwriting. Each company has unique guidelines and risk appetites that lead to variations in approvals and premiums.

Below, we highlight examples how top insurers in Canada evaluate depression in underwriting:

This highlights why shopping multiple insurers is so valuable if you have depression. Different companies may view your condition more or less favourably based on their unique underwriting appetite. It is highly recommended that you work with an experienced broker who can shop your case across insurers to find the best fit. Be wary of brokers who only represent one company.

Beyond Depression, common health issues affecting life insurance eligibility are Lupus, HIV/AIDS, Autoimmune Diseases, High Cholesterol, High Blood Pressure, etc… To learn about how these impact underwriting and how to obtain life insurance with pre-existing conditions , read these helpful references:

• Life Insurance with a Mental Illness 
• Life Insurance with HIV/AIDS
• Life Insurance with High Blood Pressure
• Life Insurance with High Cholesterol
• Life Insurance with Parkinson’s Disease
• Life Insurance with Lung Disease

Tips for Finding Affordable Life Insurance with Depression

Given the potential for higher premiums, here are some tactics to help minimize costs if you need life insurance with depression:

Opt for Longer Elimination Periods

Many insurers allow you to choose the elimination period before mental health claims/benefits are paid out. Selecting more extended periods, like 90 or 180 days, can substantially reduce premiums.

Prioritize Term Length Over Amount

If your budget is tight, choose a lower term length, even if it means lower coverage. Ten- or fifteen-year terms have lower rates than 20- or 30-year policies. Lock in coverage you can afford now.

Take Advantage of Group Rates

If your employer offers group life insurance, use this option to secure coverage with no health questions. Rates are standardized for all employees.

Consider Guaranteed Issue Policies

Guaranteed issue life insurance approves applicants regardless of health. While maximum benefits are low, it ensures some coverage.

Improve Health Where Possible

Lifestyle changes like diet, exercise, stress management, and therapy all help stabilize depression and show insurers you are actively minimizing risks.

Reapply Annually If Declined

Don’t give up if declined initially. As time passes and your condition improves, reapplying annually gives insurers updated health data that could lead to approval.

With clever strategies and compromise on policy features, you can still obtain reasonably affordable life insurance despite depression. An experienced advisor can identify where to compromise vs. where to optimize policies for your situation.

Understanding Life Insurance Suicide Provisions

A common question that arises when applying for life insurance with depression is whether death by suicide would be covered. Most individual life policies contain a suicide exclusion clause with 2 years.

This means that if death occurs due to suicide within the first two years after purchasing coverage, the insurer will not pay out the death benefit to beneficiaries. Some key considerations:

• Insurers can extend the exclusion period past two years if they are aware of severe depression, suicidal thoughts, or previous attempts.
• After the exclusion period ends, death by suicide is treated the same as other causes – the full death benefit would be paid.
• If severe depression is disclosed, some insurers may add exclusions preventing total payout if suicide occurs beyond two years. Others decline applicants in these high-risk situations.

The bottom line is that a history of severe depression, suicidal ideation, or attempts can lead insurers to limit or exclude coverage for death by suicide, particularly in the early years after the issue. This is done to avoid situations where someone takes out life insurance with the intent of suicide.

However, any death by suicide that occurs outside exclusion periods would receive the total payout.

Why Partner with an Advisor When Applying for Life Insurance with Depression

Given the complexities of underwriting depression, working with an experienced broker or advisor can optimize the life insurance process. Here are some key advantages:

Advisors Have Underwriting Expertise – They understand how to present your health history to insurers in the best light and guide you in gathering necessary medical records.

Brokers Access All Carriers – Independent brokers have relationships with dozens of insurers and can shop your policy for the most favourable underwriting.

Advisors Save You Time – They complete applications, liaise with underwriters and doctors, and negotiate on your behalf.

Brokers Advise on Alternatives – If declined, brokers can present alternatives like group insurance, guaranteed issue policies, or coverage upgrades.

Advisors Customize Solutions—They take the time to understand your finances and needs to design the optimal life insurance solution.

While depression introduces complexity to getting insured, an advisor’s specialized expertise and access to Canada’s insurance marketplace provide the best odds of securing coverage tailored to your health profile and budget.

Takeaways on Life Insurance with Depression

The key takeaways from this extensive guide on qualifying for life insurance with depression include:

• Disclosing your depression history enables insurers to accurately underwrite risk.
• Insurers evaluate depression mainly based on severity, frequency, recency and treatment.
• Stable, milder depression has better chances of standard or moderately rated policies.
• Shopping quotes across multiple insurers can reveal differing underwriting outcomes.
• Proactively managing depression with therapies and medication demonstrates reduced risk.
• An experienced broker can advise you on insurer differences and guide you in your application.
• Look into group life or guaranteed issue policies if individually declined.
• Most policies exclude death benefits from suicide for 1-2 years after issue.
• Partnering with an advisor can optimize your application strategy and policy selection.

Despite its prevalence, depression does not have to be a barrier to obtaining life insurance. We hope this detailed guide better equips you to work with insurers and advisors to secure the necessary coverage. Please contact Life buzz if we can assist with your specific situation.

Frequently Asked Questions (FAQs) about Life Insurance with Depression

Article Source

Gain insight into our unwavering dedication to accurate and transparent reporting with a focus on editorial independence by perusing the Editorial Policy of Lifebuzz.ca. Our pride in being recognized as the most reliable source

1. Life Insurance and Depression – lsminsurance.ca/info-hub/life-insurance-depression/
2. Life insurance for those with depression or anxiety – https://www.policyadvisor.com/