September 18, 2020

Depression – how does it affect a life insurance application?

Depression - how does it affect a life insurance application?

Types of depression

Depression affects people in different ways and can cause a wide variety of symptoms.

They range from lasting feelings of unhappiness and hopelessness to losing interest in the things you used to enjoy and feeling very tearful. Many people with depression also have symptoms of anxiety.

There can be physical symptoms too. Such as feeling constantly tired, sleeping badly, having no appetite or sex drive, and various aches and pains.

The symptoms of depression range from mild to severe. At its mildest, you may simply feel persistently low in spirit. While severe depression can make you feel suicidal and that life is no longer worth living.

Most people experience feelings of stress, anxiety or low mood during difficult periods in their lives. A low mood may improve after a short period of time rather than being a sign of depression.

How does having a history of depression, stress or anxiety affect a life insurance application?

The good news is that in most cases you should be able to get life insurance cover and/or critical illness cover.

However, it is common for an Insurance company to ‘load’ their premiums once they have taken into account your medical history. A ‘loading’ is an extra premium that an insurance company can add to their basic / quoted premium. Having underwritten/assessed an application, it reflects the additional risk they feel they are incurring.

Questions an insurer will want to ask you could be:

  • what if any, medication are you currently taking?
  • when did you last experience any symptoms
  • what were they?
  • how severe were they?

With your permission, the insurer may request information from your GP.

In certain circumstances, it may be possible to obtain cover on ‘standard terms’ (no increase in the premium you were initially quoted).

Our process and advice

All mainstream insurance providers have their own underwriting criteria. At Future Proof, we also have access to specialist insurance companies.  These insurers don’t deal directly with the public. They offer more specialised policies which are designed to provide cover where other major providers can’t.

Part of our research process involves contacting insurers to find out the best possible outcome for our clients. This avoids any nasty shocks later on during the underwriting process.

Would the insurer add a ‘loading’ to their standard premium? (this is an additional charge on top of their standard monthly premium to reflect their increased risk)

Choose to exclude certain conditions?

Might they decline the application? We want to avoid wasting time by making applications which may be declined.

Please feel free to talk to us confidentially about your individual case.

Every situation is unique and finding the right provider could save you thousands of pounds

Finding the right provider could save you thousands of pounds over the term of the policy. The cheapest Insurer at quotation stage may not actually be the most cost-effective option once they have completed their underwriting. The terms on which one Insurance company offers cover, may not be the same as another. With the difference, you end up paying to cost thousands of pounds extra over the whole term of the policy.

Case Study

Our client was a 35-year-old non-smoking male who was looking to arrange a decreasing term life or earlier critical illness policy. This type of policy is designed to repay a repayment mortgage in the event of death or being diagnosed with a critical illness covered by the policy. His mortgage had an outstanding balance of £46,000 over a remaining term of 19 years.

Our client told us that he had originally been diagnosed with severe depression 18 years ago, and had spent some time in hospital receiving psychiatric treatment after an attempted suicide. He had then suffered another setback 4 years ago which resulted in a 2nd suicide attempt. Having been prescribed anti-depressant medication for a year he has since made an excellent recovery. He is no longer taking medication or receiving any counselling. During the last few years, he has got married and had 2 children plus he now has a good job.

The initial quotes (not taking into account his medical history)

Company A quoted – £9.37 per month

B quoted – £9.69

C quoted – £9.86

D quoted – £9.92

E quoted – £10.34

F quoted – £10.68

On the face of it, and assuming that the cover offered was identical, (as well as setting aside medical conditions), we would have recommended Company A. However, after we completed more in-depth research, by discussing his case with actual underwriters, we recommended Company F.

Why did we recommend the most expensive quote?

Because four of the companies who provided a quote said that they would decline his application. One company said that they would increase their quoted premium by 420% and another said they would offer cover but for the basic premium quoted plus 75% (subject to receiving a GP report).

Quotes (taking into account our client’s medical history)

Company A quoted – £9.37 a month – application declined

B quoted – £9.69 a month – application declined

C quoted – £9.86 a month – premium loaded to £38.88 per month

D quoted – £9.92 –application declined

E quoted – £10.34 –application declined

F quoted – £10.68 – premium loaded by the lowest % to £16.57 per month

Our non-obligation advice could save you thousands

If the client had decided to apply to Company C directly, he would have ended up paying an incredible £5,086.68 extra over the whole 19-year term. Or, through sheer frustration, might have given up trying to get cover altogether had he applied to companies A, B, D and E directly.

This illustrates why it is essential to take advice before making an application, it could save you thousands of pounds and your valuable time.

We have up to date knowledge of the ever-changing landscape of underwriting for all providers in the UK and are committed to thorough research so that you don’t have to. What’s more our advice comes at no obligation and with no hidden costs.  You don’t pay us directly but we do get paid by the insurer if you decide to start a policy with them.

All our case studies are based on actual client scenarios, many of which pre-date 2020.  We are confident that the acceptance decision made by the insurers would still be offered. Although it is likely that the rates will have changed, your own circumstances will determine whether what amount will be payable by you and would be fully discussed with you before any plan is implemented.

Please note that any premiums mentioned are indicative only and based on this specific case study/ example, which is shown for information purposes only. Your own circumstances will determine whether the amount payable is more or less than the figure quoted.

Next steps

Whilst you are welcome to get a quote online but we would recommend you talk to one of our advisers.

Any quote that your adviser provides you with will take into account your circumstances, your medical history, as well as your budget!

An online quote is just that – a quote – it isn’t a definite offer of cover. What really matters is the premium you are offered, after your application has been assessed.

Call Freephone 0800 644 4468 – Monday to Thursday from 09.00 to 19.00 and on Friday between 09.00 and 17.00.

Please feel free to read our Independent client reviews, or read about the team at Future Proof

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Take a look at our handy guides ‘What Cover is Right for me?’

Do you suffer from a medical condition and concerned you can’t secure Life Insurance?  Please view our ‘Medical Guides’ for further information.

Whilst we will make every endeavour to help someone to arrange insurance, there is no guarantee of success.  All applications are subject to underwriting.

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The existence of a link to another website does not imply or express
endorsement of its provider, products or services by us or St. James’s Place.