Life Insurance and Depression

Depression: Background

Depression is a serious medical condition with many emotional, physical and behavioural symptoms. According to the Centre for Addiction and Mental Health, every year 1 in 5 Canadians experience a mental illness. The numbers are rising every year, especially since the COVID pandemic.

Depression is a mental or nervous disorder generally characterized by excessive sadness and a loss of interest in enjoyable activities. It is typically further characterized by a very depressed mood, loss of enjoyment of life, isolation and occasionally thoughts of suicide. When this condition is present for the first time, insurance coverage usually isn’t available until the proposed insured is recovered for a minimum of six months. Some people suffer from chronic mild depression and they’re often insurable, though typically with a medical rating that will depend on the severity of the condition.

Severity is measured based on symptoms, length of time off work/school, hospitalization and treatment, if applicable.

There are several types of depression:

• Manic Depression (bipolar disorders): A disease characterized by severe mood swings usually over a period of weeks or months. It can often be well controlled with medication, but frequent recurrence is a valid concern.
• Major: Characterized by a depressed mood, lack of interest and inability to experience pleasure in daily activities, feelings of despair or futility, disturbances in sleep or appetite, insomnia, excessive drowsiness, susceptibility to fatigue and difficulties in concentration. Frequently accompanied by weight gain or loss and a decrease in motivation.
• Minor: Symptoms of minor depression are similar to those of major depression but are less intense. There is also the depressed mood, lack of interest and inability to experience pleasure in daily activities, feelings of despair or futility, disturbances in sleep and appetite, insomnia, excessive drowsiness, difficulties in concentration, etc.

Life Insurance with Depression: Your Options

Can you get life insurance with depression? Yes! While underwriters will take note of your condition, they offer several options so people with depression can get life insurance. The rate and type of insurance depend on each individual’s condition and level of depression. To help illustrate this point, we have created the chart below.

Risk for insurer	Insurance type	General description	InsurEye recommendation for this pre-condition
Highest risk for insurer	1. No medical life insurance, guaranteed issue	• Good choice for people with very serious health issues who do not qualify for medically underwritten plans • Offers low coverage (up to $50,000) at high prices • Does not require a medical exam or any questionnaire	✓ A great option when no other insurance can be obtained – however, the coverage is low and the premium is high. The insured must also not pass away from any condition other than an accident during the first two policy years. If they do, the premiums are returned to a named beneficiary
Medium risk for insurer	2. No medical life insurance, simplified issue	• Good choice for people with significant health issues who do not qualify for medically underwritten plans • Offers medium coverage (up to $500,000) at medium prices • Does not require a medical exam, has a short questionnaire	✓ ✓ Choose this option if you cannot qualify for a rated policy and you require up to $500,000 in coverage. This is a very popular option of life insurance for people with depression.
Medium-low risk for insurers	3. Medically underwritten RATED life insurance	• Good choice for people with some health issues • Offers large coverage (up to $3,000,000 or even more) • Prices are significantly higher than for standard policies • Almost always requires a medical exam	✓ ✓ ✓ This is the best choice for people with more recent (within one year) depression episodes which were mild or moderate. It means higher rates than standard medically underwritten life insurance but the same coverage and other perks.
Low risk for insurers	4. Medically underwritten STANDARD life insurance	• Good fit for people with good health or minimal health issues • Offers large coverage (up to $3,000,000) at low prices • Prices are quite low compared to most other insurance types • In some cases, can be issued without a medical exam (e.g., younger ages)	✓ ✓ A successful application is possible if the person has been in long-term remission, even if on medication (with no recent changes in dosage, etc.)
Lowest risk for insurers	5. Medically underwritten PREFERRED life insurance	• Good fit for people with very good health who are in very good shape • Offers large coverage (up to $3,000,000) at low prices • Lowest prices because of preferred discounts • In many cases, can be issued without a medical exam (e.g., younger ages)	✖ Likely unavailable for people diagnosed with depression.

Legend
✓ ✓ ✓ l	Best choice
✓ ✓ l	Second best choice
✓ l	Alternative to consider (not the best choice)
✖ l	Not available

It is important to remember that some depression-related data will impact the type of policy and price that you can get:

• Date when you were first diagnosed with depression
• Age
• Improvement in the condition or recent worsening of symptoms
• Drug and/or alcohol consumption
• Duration of stability (no interference with daily activities)
• Medication and/or hospitalizations
• Number of occurrences
• Severity
• Any suicide attempt or suicidal thoughts
• Any limitation of activities
• Any time off work

Other general health and habit-related aspects will also impact your insurance type and costs.

An attending physician statement, better known as an APS, is usually required if insurance is to be considered. Expect to answer questions applicable to the “neurological and mental health” section in the application or “nervous disorders” section of the paramedical exam or phone interview.

How do Insurers Treat Depression?

	MILD CASE	MODERATE CASE Treatment/No relapses	SEVERE CASE Manic
Insurer A	• >1 year: Standard	• + 150%	• >1 year: + 200% to decline
Insurer B	• +50% to +150% • > 3 years: possible standard	• Postpone 1 year • Thereafter + 50% to +150% depending on duration of stability; • > 5 years: possible standard	• Postpone 1 year • Thereafter + 50% to +200% depending on duration of stability;
Insurer C	• Standard (if only 1 episode)	• + 150%	• Decline

Life Insurance Quotes for Depression

Below are sample life insurance costs for applicants diagnosed with depression. Please note that each policy depends on several factors such as the number of episodes, severity of the condition, duration of stability, treatment and more. Work with our very experienced life insurance brokers who will help you find and choose the best life insurance quote. Our brokers have experience with many application forms and policies designed for Canadians suffering from depression.

		Male, 40 years old, non- smoker, policy of $25,000, Term 20	Female, 45 years old non-smoker, policy of $200,000	Female, 60 years old, non-smoker, policy of $150,000
Highest risk for insurer	No medical life insurance, guaranteed issue	$62/month	Coverage of $200,000 not available	Coverage of $150,000 not available
Medium risk for insurer	No medical life insurance, simplified issue	$15/month	$27/month	$104/month
Medium-low risk for insurers	Medically underwritten RATED life insurance	$24/month	$41/month	$190/month

Does Life Insurance Cover Depression?

A common question among applicants is, does life insurance cover depression if I were to pass away? The answer is, it depends! If accidents occur while under the influence of drugs or alcohol, usually traditional life insurance will not pay out the claim. In the case of suicide, this is, in most cases, not covered either.

Also, there is one exception that is important to know, and it is about guaranteed issue life insurance. A guaranteed issue policy will not pay out for any reason other than death by an accident within the first two policy years. If the life insured passes from an illness, including depression (suicide, self harm, etc.) the policy will not pay out, but the premiums will be returned to a named beneficiary.

So, basically speaking, life insurance policies do cover depression, however, it depends on several factors. Speak with a life insurance broker to learn more and to be matched with the application that best suits your needs.  

Getting Life Insurance with Depression

Life insurance underwriting with depression is often not as straightforward as without this health pre-condition. The underwriter takes many factors into account including the severity of your condition, treatment (therapy, medication) you may be taking, date of diagnosis, etc.

The process for getting life insurance if you have depression is as follows:

Step	Who does it	Approximate length
STEP 1: Share your data (e.g. health, coverage)	You/Broker	10-30 min
STEP 2: Explain details, submit your application	Your Broker	10 min
STEP 3: Review your application, request medical records	Insurer	1 -14 days
STEP 4: Issue medical records and special documents e.g. APS	Your Doctor(s)	2 weeks – 6 months
STEP 5: Evaluate your medical records, underwrite policy	Insurer	1 week – 2 months
STEP 6: Share confirmed price, proceed with payment	Broker	30 min
STEP 7: Issue and share the policy with you	Insurer	1 week – 2 months

In summary, life insurance with depression depends on the insurer. Options include a rated policy or a simplified or guaranteed issue policy. All these options come with different processing times and rates. It is best to work with a broker that has access to a variety of applications. The broker will review your case and match you with the application for which you are most likely to be successful. Our life insurance specialists have access to more life insurance companies (25+ insurers) than most other brokerages in Canada. This allows them to select the companies who can process your application the fastest.