R U OK?
As stigmas shift and we become more open about mental health, it appears that not everyone has caught on to this. There is still some misunderstanding and some discrimination.
Having a chronic mental health condition, depression, anxiety, or just needing help to get through a difficult time is no longer seen as a weakness. According to the Black Dog Institute, one in five Australian’s will experience a mental health illness every year.
We’re encouraged (and we should) seek help when needed.
So, why do some insurers penalise those seeking help, and some don’t? And why do some insurers pay and some don’t? Let’s take a look.
INSURANCE PREMIUMS
We’re seeing a rise across the board in the cost of insurance premiums and it appears that claims for mental health may be one of the causes.
Mental health claims have doubled over the past five years, and is now the third most common cause of disability income claims according to a recent study by KPMG and the Financial Services Council. The study also found that mental health claims increased by 53% from 2013 to 2018 and that those claiming for mental health conditions were claiming for longer periods of time.
SUCCESSFUL MENTAL HEALTH CLAIMS
The good news is that insurers will pay out on valid claims where there has been no exclusion put in place.
According to the Financial Services Council, life insurers paid out $1.24 billion in 2019 for mental health claims alone.
We have worked with a number of clients who need a little time off to recover, or who are never able to work again. These clients have seen the value of having the insurance cover in place and for them, it has paid off and allowed them to recover at their own pace without having to worry about their finances. See our case study on one our successful TPD claims.
In fact, we have helped our clients claim $1.2 million in mental health claims over the years.
MENTAL HEALTH CLAIMS PROCESS
Having an adviser or advocate helping you when you apply for insurance can make a difference. For example if you sought help for a particular situation such as the death of someone close to you (situational) as opposed to ongoing care, we can put a case to forward that there should be no exclusion in this instance.
We can help you if you want to make a mental health claim on your insurance.
We will review your policy and talk with you about your situation to see if a claim is possible. We then contact the insurer on your behalf to begin the claims process, including completing and submitting the application. We liaise with the insurer and work through the assessment process with them.
If your claim is successful, we recommend seeking financial advice to make sure that the funds you received can help you both in the long term and the short term.
Let’s look at some of the factors that will affect a claim for mental health.
MENTAL HEALTH EXCLUSIONS
When it comes to personal insurances such as IP, TPD and Trauma, some insurers will put in an exclusion for pre-existing conditions, meaning they won’t pay out if you suffer a related event. For example, if you have a history of cancer, you’ll be covered if you have a heart attack or stroke, but not if you receive a new cancer diagnosis.
Therefore, if you have a history of seeking support from counsellors, psychiatrists or psychologists, you need to be prepared that when you apply for personal insurance, there could be an exclusion for mental health or your application may be rejected.
Our concern, and it is shared by health professionals, is that some people may avoid seeking help when required because it may impact their ability to claim in the future. And this is counter-intuitive… if you don’t get help when you need it, your mental health is more likely to deteriorate, and you’ll be in a position where you need time off work to recover from a mental health episode and need to claim.
You must always declare your full medical and mental health history when applying for personal insurances, failure to do so could result in a claim not being paid due to non-disclosure.
Past mental health history
The insurer will contact your medical health professionals and review your history. They will note if there has been any discussion of mental health including if you mentioned you were feeling stressed or anxious. They will investigate if you have sought help or taken any medication to help with the situation.
Income Protection Mental Health Claims
You will need to have proof of your condition from at least one doctor, you will need to be actively engaged in your recovery and following the treatment plan laid out by your doctor as well being under the regular care of a medical professional. Your claim will be reviewed on a month by month basis.
TPD Mental Health Claims
You will need to have at least two medical professionals to confirm your diagnosis. One of these needs to be a psychiatrist who has given you a diagnosis and treatment plan. As above, you’ll need to be actively engaged in your treatment and following the advice of the medical professionals.
Activities of Daily Living Test
The Activities of Daily Living (ADL) test is applied by insurers to understand how illness or injury impacts a claimant’s life in a physical way. For example, the claimant can’t walk, feed or dress themselves. This test works for claims that cover a physical illness.
However, research by the Australian Securities and Investments Commission (ASIC) found that 77% of mental health claims were rejected when the ADL test was applied. A mental health issue may be debilitating enough that you can’t work, but if you’re still able to dress yourself.
CONCLUSION
Remember, you must declare all of your past medical and mental health history when applying for insurance. When you start your claim, the insurer will conduct an investigation into your medical history and anything you fail to disclose could be cause for non-payment of a claim.
While the standards are high when applying for cover, insurers are paying out when required so you should have confidence that if you have a valid claim, the insurer will hold up their end of the bargain. We have a dedicated Claims Management team that can help you should you wish to make a claim.
Talk to your adviser about your insurance, making sure you have the right level of cover and whether you’re covered for a mental health claim.
It is very important that you understand that the information above is general in nature and does not take into account your personal situation. You should consider whether the information is appropriate to your needs, and where appropriate, seek professional advice from a financial adviser. It is also worth noting that the Australian financial and taxation system is ever-changing, and the information above may no longer be relevant. Again, we suggest seeking professional advice from a financial adviser before proceeding.
