One in four of us will suffer a mental health problem at some point in our lives, with the Organisation for Economic Co-operation and Development estimating that this costs the UK £70bn a year in lost productivity, benefit payments and healthcare expenditure.
The size of the problem means it is high up on the government agenda. In January, prime minister Theresa May announced a package of measures to improve mental health support. Aimed at creating parity for mental and physical health, these include greater use of digital mental health services, mental health first aid training for secondary schools, and a review looking at how employers can improve mental health support in the workplace.
Insurance provision
Insurers also have a role to play, enabling individuals with mental health conditions to access protection policies such as life insurance, critical illness and income protection.
Rhoda Lawrence, insurance specialist at Life Insurance Help, which helps people who have health conditions or dangerous pastimes to find insurance, explains: “Insurers assess applications on a case-by-case basis, so it will depend on the nature of the mental health condition and how it affects the risk.”
As an example, although any history of mental health must be disclosed in the application, where an incidence is deemed to be ‘reactive’ it will usually be overlooked. This could be the case where a spell of depression or anxiety is linked to a particularly difficult period in someone’s life: for example, bereavement, the breakdown of a marriage or redundancy, with most people making a full recovery once the stressful time has passed.
Life lessons
An insurers approach will depend on the type of product. Exclusions are unusual on life insurance, with insurers preferring to increase the premium rather than risk confusion when the policyholder’s family comes to make a claim.
“We look for red flags, such as hospital admissions, attempted suicides, or coexisting issues such as alcohol or drug abuse, and may also request a GP report if we need further information,” says Darren Lee, director of underwriting and claims at Vitality Life.
“Where there is an increased risk, we can load the premium, but if the risk is too high we may decline cover.”
Life insurance will pay out in the event of a suicide, but to prevent people taking out cover when they are feeling suicidal, insurers include a clause that requires policies to be in force for at least 12 months before such a claim is accepted.
Mental health conditions present much less of an issue for critical illness insurance underwriting. Although associated issues such as alcohol addiction or obesity may push up the risk of some conditions, Stephen Crosbie, protection director at Aegon, says mental health does not affect the incidence of serious illnesses such as cancer or stroke.
Income cover
Where an individual’s mental health will have much more of a bearing is income protection. Mental health conditions are one of the most common claims, with insurers reporting that they account for as much as one third of all of those they pay.
As with life insurance, the nature of the individual’s illness will be assessed to determine the likelihood of it reoccurring and resulting in a claim. This means that mild, reactive conditions are likely to be overlooked. But exclusions are much more common.
Mr Lee explains: “We will load premiums, but where the extra premium makes cover unaffordable it is sensible to exclude conditions. Each case is looked at on its own merits, with any related health conditions also taken into account.”
This review process also means it can be worth revisiting cover if exclusions are in place. “If a client has not experienced symptoms of a mental illness for the past three years, it may be possible to have an exclusion lifted,” explains Emma Thomson, life office relationship director at LifeSearch.
“An insurer’s approach will depend on the nature of the condition, but it is worth reviewing.”
Support lines
As well as helping individuals with mental health conditions to access cover, insurers are also keen to provide more preventative support. This is particularly the case in the group market, where products often include a range of added-value services.
Employee assistance programmes, which can provide access to advice and counselling where necessary, are common, but insurers also offer other services that can help to safeguard an individual’s mental health.
For example, with early intervention key to reducing the length of absence, Canada Life Group Insurance provides a day-one referral process on its group income protection for mental health issues.
This type of support has benefits for insurers, as well as policyholders. Managing director of support service RedArc, Christine Husbands, says the sooner someone with mental health problems receives help the better.
“NHS resources for mental health are very stretched, with some people facing long waiting times to get counselling. Where an insurer provides support, it is possible to access counselling quickly, potentially preventing a claim altogether,” Ms Husbands explains.
Individual attention
Economies of scale and the reduced risk of anti-selection may make these types of initiative more feasible in the group market, but individual insurers are catching on, too.
Mr Crosbie says: “It is becoming more common to offer these added-value services in the individual market. We added a health and wellbeing service for our protection customers last year, giving them access to information, support and counselling around the clock. It is the right thing to do.”
Other firms that have adopted similar approaches include Royal London, which offers access to its Helping Hand service The Exeter, provided by RedArc. The service provides a GP helpline and a confidential helpline. Also, Vitality Life, which is teaming up with digital mental health and wellbeing support service Big White Wall.
While this trend is encouraging, Ms Thomson says that usage can still be low: “Policyholders do not always know they have access to these benefits. Insurers need to do more to promote them.”
In addition to mental health support services provided by the protection insurers, it is also possible to take out cover that will help with the cost of treatment. Medical insurance and cash plans include an element of benefit that can be used for this purpose.
Cover plans
Most medical insurance schemes include up to 28 days’ in-patient or day patient cover, which is suitable for acute psychiatric conditions such as schizophrenia or clinical depression. This cover is available as standard or, to help customers manage costs, as an option.
For example, Aviva’s Healthier Solutions plan includes £2,000 of outpatient psychiatric treatment as a core benefit, allowing policyholders to upgrade to 28 days in-patient if required.
Cash plans can also provide some benefit for people who may be experiencing mental health problems. Relevant areas of cover can include specialist consultations and health and wellbeing benefits that can be used for treatments such as cognitive behavioural therapy and counselling fees. In addition, counselling and support helplines are commonplace across medical insurance and cash plans.
On both types of policy, pre-existing condition clauses can place restrictions on the treatment costs that will be picked up.
Jennie Doyle, marketing manager at Health Shield, explains how this might affect customers: “If someone has been diagnosed with a mental illness before they take out a cash plan, it may be excluded. In practice, this would mean they would not be able to claim for any specialist consultations relating to the condition.”
With the government committed to removing the stigmas surrounding these conditions, there is likely to be growing awareness of the importance of looking after your mental health and wellbeing. The protection industry has a key role to play.
