A survey of 240 people by Mental Health UK found the majority (86 per cent) affected by mental illness did not know where to get independent advice on different types of insurance.
According to the charity, this meant that “right at the beginning of their journey into the world of insurance, the vast majority of people don’t know where to turn for support”.
The charity also found more than 37 per cent of respondents had never applied for protection insurance, some because of "how they felt they would be perceived by the insurance industry or the impact the process of applying would have on them”.
Conducted between December 2019 and March 2020, the majority (87 per cent) of survey respondents had experience of mental ill-health and had applied, or considered applying, for insurance; while the remainder were a family member or carer who reported the experiences of the person they support.
Brian Dow, CEO of Mental Health UK, said: “Among the many financial issues we hear about are the obstacles that people affected by mental illness can face in accessing the insurance they need.
“[People] believe that they are uninsurable or that they have been discriminated against. We also understand that insurance firms need to take commercial decisions and that, as with applicants of all types, there will at some point be disagreements between insurers and individual.
“But we don’t believe that those two points are as far apart as they appear, and an improved understanding is the bridge that could link them. There is clear demand for insurance among people affected by mental illness.”
Protection gap
Mental Health UK’s research found almost four in 10 (38 per cent) had not applied for protection insurance because they thought it would be too expensive. Three in 10 (31 per cent) said they did not think they would get cover because of their mental health issue.
According to one respondent: “‘The process seemed overcomplicated and seemed to imply that I might be uninsurable. I was too anxious to question this”.
Additionally, the research found that three in 10 (31 per cent) believed it would be “too distressing” to discuss their mental health issue with an insurer.
About half of those who had not applied for protection insurance felt they would be encouraged to apply if there was greater clarity about how their mental health experience would affect their application.
Information about insurers or brokers with experience in mental health conditions was also cited as a factor by half of respondents.
Mental Health UK’s report comes after life insurance broker LifeSearch’s CEO, Tom Baigrie, urged advisers to signpost protection customers they are unable to help to advisers who can.
Negative experiences
For respondents who had applied for protection insurance, the experience did not seem entirely positive, as 55 per cent said they did not feel they were “adequately warned” that some questions might cause distress. Only one in five agreed that questions in the application were asked sensitively.
Additionally, 38 per cent of respondents who had applied for protection said they were either turned down completely, or told to apply at a later date. Over half (54 per cent) said they were not provided a reason or explanation, while 52 per cent felt the rationale had not been made clear to them.
The survey also found that over half (52 per cent) would consider downplaying their mental health in future if they applied again, after being refused cover or offered exclusions.
However, protection provider Aegon has warned of the risk with submitting false information during the application process, after it reported a rise in the number of life insurance claims it was unable to pay due to misrepresentation last year.
chloe.cheung@ft.com
