Life insurance:Are you covered for depression?

By Just Money Editor
According to the South African Depression and Anxiety Group (SADAG) 20% of South Africans will develop a depressive disorder during the course of their lives. Zane Wilson, founder of SADAG, says depressed people are often excluded by insurers because they are seen as a high suicide risk. Insurers also say that when it comes to coverage, depression presents an increased risk to insurance companies.
How does your insurer rate depression? 
Insurers take the severity of depression into consideration when it comes to coverage. Reactive depression and mood disorders are two of the common types of depression insurers deal with. Outsurance spokesperson, Natasha Kawulesar, says many people who do or have suffered from depression previously are eligible for cover dependent on their condition.
“Someone suffering from reactive depression, usually caused by circumstances such as the loss of a loved one, may qualify for coverage if there are no underlying conditions. [With] someone suffering from a form of major depression such as mood disorders (e.g. bipolar disorders); we would consider their profile, treatment that they may be on, whether they might have been hospitalised for treatment and what their prognosis is.  
Based on the information a decision would be made on whether cover be provided and if there might be any restrictions to cover,” says Kawulesar.
Based on the information provided, insurers may place permanent suicide exclusion on life cover or apply a mortality loading. Dalene Allen, co-founder of long term risk product provider Altrisk, says brokers often grapple with decisions to exclude depression on disability and income benefits, as the exclusion clause often includes associated conditions such as chronic fatigue and fibromyalgia. These conditions are associated with depression and can render claimants unable to work for periods of time, with a significant impact on income benefits claims.
But Dr Pieter Coetzer, Sanlam's chief medical adviser, says companies are usually wary of severe depression cases where people need two or three types of medication to control their illness. Anyone who has been hospitalised in the last three years or attempted suicide is also considered a high risk case.
What does your insurer need to know?
Allen explains underwriters will need to know the date of diagnosis, method of treatment and past methods of treatment. Doctor’s details, symptoms, dates of last symptoms and details of any previous hospitalisation is also some of the information an underwriter will require . Details of any suicide attempts as well as the specifics of time taken off work as a result of the condition will need to be disclosed.
Disclosure is vital
Insurers claim that besides back conditions, depression is the easiest condition on which to submit a fraudulent claim. It is also prone to malingering – a medical term for fabricating or exaggerating symptoms for motives such as financial compensation (often tied to fraud), avoiding work, and obtaining drugs. Allen says this makes the disclosure of a previous diagnosis vital to the underwriting process.
“Depression has a direct impact on a sufferer’s risk of premature death or disability due to suicide or failed suicide attempts; and the abuse of medication, drugs or alcohol which increase the risk of a serious accident. Therefore, regardless of age or health status, you need to provide information on your mental health and whether you have been diagnosed with or treated for depression.  Attempting to hide depression can be damaging at claims stage,” says Allen.
The effect on your premium
Kawulesar explains that Outsurance has no set rules on premiums that will be charged for policyholders suffering from depression.  Each client is rated on an individual basis and a premium is determined based on his/her circumstances and cover required.
Coetzer adds that in most cases people suffering from depression pay a standard premium disability insurers could place an exclusion or loading on a policy.
“But even if you have to pay extra on your premium it is better to be honest to your broker than paying a lower premium each month and not being able to claim because of non-disclosure,” says Dr Coetzer.
Insurance is nothing to feel blue about
Unless your depression is classified as a severe case you will pay a standard premium.
When it comes to disability coverage for depression, companies may place a loading on your premium, but non-disclosure could lead to a rejected claim when you need it the most.
Always look at the fine print of an exclusion. According to Coetzer some companies have strict stipulations based on indirect causes to your illness. “When it comes to exclusions, consumers are protected because the onus is on the company to prove a claim is related to an exclusion,” says Coetzer.

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