Andrew Wibberley considers Income Protection and mental health

Income Protection and mental health are very closely linked. Mental health is one of the top two causes for IP claims at all insurers, and should be part of the story when talking with clients about this product.

Historically I have considered one of the reasons for CI outselling IP in the UK is people’s fear that cancer could happen to anyone whilst imagining mental illness happens to other people. I think this incorrect assumption is now being much better understood – and so this conversation and product should become more relevant.

This shines even more of a spotlight on how we underwrite mental health conditions for Income Protection. The underwriting of mental health is not easy – but that does not excuse poorly worded questions or making unfair decisions.

In my opinion there are some questions that stand out as being inappropriate and ineffective that remain present in some insurers’ approaches. At application level some insurers ask: “Have you had stress, anxiety or felt tired in the last five years?”. I can only assume that anyone who says “no” to this question is either lying or dead, but for these insurers this triggers more in-depth questioning on mental health.

As you get deeper into questioning some people will still be asked: “When was your last episode?” or: “When did you last feel anxious?”. These sorts of black and white questions do not reflect the reality of life with a mental illness, and again lead to confusion and concern for the applicant and a lack of useful information for the underwriter.

Insurers may underwrite mental health better if they spent some more time on it.  If they are asking 30 application questions then it would seem appropriate to use 4 or 5 of these to ask everyone about their mental health. These should not just focus on the negative but also include how you positively manage your mental health. Most insurers today just ask one or two diagnosis seeking questions – which is part of the reason for the clumsy cocktail of words that can result.

For advisers and underwriters alike it is vital that the individual is considered more than the diagnosis they happen to have. From personal experience I know how “official” diagnoses can fluctuate and how you can enter an entirely different medical treatment path based on this.

The same person could be diagnosed with post natal disorder 12 months ago, generalised anxiety disorder 6 months ago and bipolar disorder today with pretty consistent symptoms through those diagnoses. The according underwriting decisions would likely go from +50 to exclude to postpone if we allow ourselves to be blinded by the condition title rather than the individual’s experience.

It is hopefully clear by this point that there is no straightforward answer to “how do you underwrite mental health conditions”. Every company will have their own underwriting philosophy, and it is important to understand these as thoroughly as you can to get the most appropriate cover.

As guidelines though, the following may be useful to give a sense of where underwriters will generally start in their thinking:

– standard rates – where the mental health condition was linked to external factors that are no longer present e.g. a previous relationship, or a specific event e.g. death of partner / parent

– rating – where the mental health condition is well controlled over a significant period of time. Control and resilience have been displayed over this period and so there is confidence that if there are more flare ups these will be managed in a similar way in the future.

– exclusions – where the mental health conditions is either a recent, hopefully one off event or where it is a chronic condition that is well controlled with no link to physical illness. Exclusions cannot always be used due to the crossover between mental health and physical conditions, and potential for the exclusion to not cover a related claim.

– postponed – where the diagnosis or treatment is currently unstable, or where there has been a recent significant change in circumstances. This may also be used if there are potentially linked physical conditions present

– declined – where there is a long term history of mental health problems resulting in recurrent significant time off work and / or suicide attempts.

Insurers are continuing to work to find ways to improve their understanding and underwriting of this rapidly evolving area. At the moment it really is good to talk about mental health with underwriters to ensure you get the right terms.