Mental health history and insurance underwriting

It is worth saying the uncomfortable thing plainly. Where there is any recorded mental health history, a very common outcome in the New Zealand market is that life cover is issued at standard rates and income protection is issued with a mental health exclusion. Trauma cover often carries a similar restriction. This is a pricing response to claims experience — mental health is one of the largest causes of income protection claims — and it is applied to a great many ordinary applications every year.

None of that makes it a comment about the person. Underwriters are not assessing character, resilience or seriousness. They are applying a rating table to a category of claim, and the same table is applied to everyone with a similar recorded history.

Disclosure is mandatory regardless. A period of counselling, a short course of medication, a GP consultation about how you were feeling — all of it is material and all of it will usually appear in your records. The exclusion that follows disclosure is survivable. The consequence of leaving it out is a policy that can be challenged at the point your family needs it.

The follow-up questions are detailed. Answering them fully is what gives an underwriter something other than a blank to price.

• What the diagnosis was, if one was made, and by whom.
• When it began, how long it lasted, and when it resolved.
• What treatment was given — counselling, therapy, medication — and for how long.
• Whether medication continues, and if it has stopped, when.
• Whether there has been more than one episode.
• Whether any time off work was taken, how much, and when.
• Whether there have been any hospital admissions.

Evidence commonly requested

• A GP report, which is almost always requested where mental health is disclosed.
• A specialist or counsellor report in some cases.
• Occasionally a questionnaire completed by you in addition to the application.

What underwriters look at over time is length of time since the episode resolved, length of time since medication ended, whether there has been a single episode or several, whether any time off work was required, and whether the record shows a stable period since. A single episode several years ago with no recurrence and no time off work is assessed quite differently from a recent or repeating pattern. Exclusions applied for this reason are sometimes reviewed after a long documented clear period, though insurers move less readily on exclusions than on loadings.

These are the details that decide whether the cover does what you expected. Read them before you compare on price.

• That an income protection exclusion here is common, and is not a reason to abandon the application.
• That counselling and privately paid therapy are disclosable, and are not exempt because there was no diagnosis.
• Whether the exclusion offered names a specific condition or covers mental health broadly, including stress-related claims.
• That the same file can be standard on life cover and excluded on income protection — that is normal.
• That appetite differs sharply between insurers, so one insurer’s exclusion is not the market’s answer.

Every New Zealand insurer writes applications with a mental health history to its own wording, and the words are where the money is. Two policies that look identical on price can pay very differently when it matters. Closing that gap is the entire job of an adviser.

• Mental health appetite varies more between New Zealand insurers than almost any other category, and it moves quickly.
• An adviser can pre-assess anonymously and find out which insurer currently offers the narrowest exclusion.
• Presenting a clear chronology — dates, duration, treatment, time since — usually produces better terms than a bare disclosure.
• Where an exclusion is unavoidable, an adviser can look at whether TPD or trauma cover fills part of the gap.
• After a long clear period, an adviser can request a review of an exclusion with the evidence attached.

There are three ways to buy life cover in New Zealand, and they are not equivalent. You can buy direct from one insurer, which means you see one product range and one underwriting appetite. You can buy through your bank, which usually means a single insurer’s product sold under the bank’s brand, often with narrower definitions. Or you can go through an adviser, who quotes several insurers at once and is required to put your interests first.

The premium you pay is the same either way. Insurers build adviser commission into their pricing whether or not an adviser is involved, so going direct does not get you a discount — it just removes the person whose job is to argue your corner at application and at claim time.

• An adviser can see which insurer is currently taking your health history on standard terms, and which one will load or exclude it.
• An adviser can structure cover across two insurers if that produces a better outcome than putting everything with one.
• An adviser handles the underwriting back-and-forth, and is the person who chases the claim when a family is least able to.
• An adviser has to document why the recommendation suits you, which is a written record you can hold them to.

We are a referral service, not an insurer. We do not quote premiums and we do not sell policies. What we do is put you in front of one licensed New Zealand adviser who can compare the market properly.

1. 1

   You tell us what you are looking at

   The form takes about a minute. Nobody asks for your medical history on a web form — that conversation happens with the adviser, properly, and only once you have decided to proceed.

2. 2

   An adviser calls you

   A licensed New Zealand adviser talks through your situation: who depends on you, what you owe, what you already have in place, and what you are actually worried about.

3. 3

   They compare the market

   The adviser quotes across the major insurers, checks which of them will take your health history on the best terms, and puts the options side by side in writing.

4. 4

   You decide, in your own time

   There is no obligation and no cost to you. If the answer is that you already have enough cover, a good adviser will tell you that.