Insurance cover and mental health
A guide to insurance cover and mental health, with information about what you can do to get support.
Risk assessment and disclosure
How do insurance companies decide who to insure and what to charge?
The main aim of insurance companies is to maximise their profits. Companies decide who to insure, who not to insure and what to charge by assessing the likelihood of paying out on a claim.
When you try to buy insurance, the insurance company will ask you questions, and on the basis of your answers will decide whether you are a ‘normal’ or a ‘higher than average’ risk customer. If they think you are ‘high risk’, they may then refuse to insure you or ask you to pay more for your insurance.
Unfortunately, some companies make their assessments without adequate information or asking the right questions about the risks of many mental health problems. You may find that you are asked just a single general question about whether you have, or ever have had, a mental health problem. If you say ‘yes’ you may find that you are refused insurance altogether, because this single question has placed you in a ‘high risk’ category. This can happen regardless of the specific characteristics of either your mental health problem or the rest of your life.
However, the law offers protection against this sort of unfair practice, and we explain in the following pages, how it can be challenged.
Understandably, you may be worried about the consequences of disclosing your health information. However, if you do encounter questions about your mental health when completing an insurance application form and you still want to take out the cover, it is always advisable to give an accurate account of your medical history.
If you do not answer truthfully and the insurer finds out later, you may find that your policy becomes invalid, whether the claim is related to your mental health problems or not (see ‘Making a claim on your insurance’). This may also affect subsequent applications and future claims that you make.
Can they discriminate?
Can insurers discriminate against people with mental health problems?
Protection under the Equality Act 2010
The Equality Act 2010 (which has now replaced the Disability Discrimination Act [DDA] for England, Scotland and Wales) sets standards of fair treatment for suppliers of services, such as insurance companies. These standards make it illegal to discriminate against people who have a disability, including by refusing to provide the service or providing the service on worse terms than for non-disabled people.
This means that while insurers are entitled to ask if you have ever had a mental health problem, if an insurer refuses insurance, or increases the premium on the basis that you have said you have such a problem, they may be breaking the law. If this happens to you, you could have a case of complaint under the Equality Act and you may want to seek legal advice (see ‘Making a complaint’).
Note: The Equality Act defines a disabled person as someone who has a ‘physical or mental impairment which has a substantial and long-term adverse effect on his or her ability to carry out normal day-to-day activities’. You will be protected against disability discrimination if your mental health problem meets this definition. It is also worth noting that legal protection extends to a person who has previously had a disability.
Improved industry guidelines
These anti-discrimination laws have had an effect on insurance industry guidelines.
The Association of British Insurers (ABI) has produced a guide to disability discrimination law and insurance, ‘An Insurers Guide to the Disability Discrimination Act 1995’. Although it has not been updated to refer to the Equality Act, the guidance is still valid because the Equality Act operates on the same principles as the DDA.
The ABI has also, more recently, produced joint guidelines with the British Medical Association about providing medical information to insurance companies.
Can insurers ever justify different treatment?
Although the Equality Act sets a general rule that an insurance provider must not refuse you insurance or charge higher premiums because you have a disability, it also specifies some circumstances where they are legally allowed to treat you differently to someone without a disability.
In particular, the insurer may be able to justify treating you differently in specific circumstances relating to risk. This is a complicated area of law; however, the onus is on the insurers to show that they have acted lawfully.
The insurance company must be fair in its dealings with disabled people (including people with mental health problems) and must have an objective and reasonable basis for any difference in treatment between disabled and non-disabled people. Insurers' decisions must be based on information relevant to the assessment of the risk to be insured and from a reliable source.
Such sources may include:
- statistical data about risk or life expectancy
- medical research information
- a medical report.
The ABI guidelines specify that insurers must make sure that the information is accurate and that their use of it is reasonable. It must be shown that the disabled person represents an increased risk; if not, there should be no difference in their treatment.
This example (adapted from the ABI Guide) illustrates how the law requires insurance companies to act.
A man applies for life cover and income protection. He answers ‘yes’ to a question that asks whether he has ever had any form of mental or stress-related illness that involved treatment and/or resulted in time off work. His GP provides a report indicating that he experienced anxiety-related symptoms and had two weeks off work 7 years ago, but had no prior history of anxiety. He was prescribed Seroxat and, over the next 2 years, the anxiety was gradually resolved and the treatment stopped. Since then he has been symptom free. In the circumstances of the case, the insurers should offer the life cover and income protection on standard terms with no extra premium.
The ABI advises insurance companies to offer full cover, wherever possible. Even where this entails charging an extra premium, this is normally preferable to refusing cover.
Making a claim
Making a claim on your insurance
Insurance companies should not refuse to pay out on an otherwise valid claim simply because you have a mental health problem, if that is not related to the reason for your claim. The sole exception is if you have failed to honestly answer questions about your mental health history. In these circumstances claims can be rejected, even if the claim was completely unrelated to any mental health problems.
Different types of insurance
What issues arise with different types of insurance?
This section covers different types of insurance cover; in particular, we give instances where insurers are still legally permitted to treat disabled people less favourably. However, it is not a statement of the law. If you are unsure about whether you have been treated unjustly by your insurer, you should consider seeking legal advice or taking up a complaint with the Financial Ombudsman Service (see the 'Making a complaint' and ‘Useful contacts' tabs).
Because the law is complex, allowing different treatment of people with mental health problems in some circumstances, different insurance companies may operate different rules – so it may pay to shop around, including consulting the specialist companies listed in ‘Useful contacts’.
Private health insurance
Insurers will generally offer private health insurance to people with mental health conditions, but refuse to cover claims for conditions and illnesses that exist at the time an insurance contract is taken out (called pre-existing conditions). (See ‘Useful contacts’ for a list of companies that specialise in providing insurance cover for people with pre-existing medical conditions.) To be lawful, any refusal to provide any cover would have to be ‘reasonable’ and based on objective evidence (see ‘Can they discriminate?’).
ABI guidelines states that, generally, cover should only be refused where an applicant has a condition which affects many aspects of their health, potentially resulting in a wide variety of medical claims. In this case, there would be no alternative but to refuse cover, because the extent of exclusions that would have to apply would otherwise cancel out the benefits of the policy.
Hospital treatment is generally limited to a specific timescale, and outpatient treatment to a maximum cost ceiling. Any such limitations should treat physical and mental health conditions in the same way.
Medical charges abroad can prove to be considerable, and you will not usually be entitled to emergency healthcare without charge.
If you are travelling within the European Union (EU) you can apply for a free European Health Insurance Card. The card lasts for three to five years, and entitles the holder to receive free or reduced-cost emergency healthcare when visiting EU countries. You can apply for it online at ehic.org.uk or by telephone, by calling 0845 606 2030, or via a local Post Office.
Even if you take out travel insurance, it is worth obtaining this card if you are travelling in the EU. However, this card is not a substitute for comprehensive travel insurance, since it won’t cover the cost of cancelled travel arrangements, lost money or luggage.
Be aware that ‘standard’ insurance policies sold with holidays often have exclusions in the small print, which means that you will not be able to claim for anything relating to your existing or previous mental health condition; however, the other elements of the travel insurance should not be affected. For example, if you have a pre-existing condition of schizophrenia, and experience symptoms whilst you are on holiday, your insurer may refuse to cover treatment of this particular condition; however, if you break your leg, and this is clearly not related to the schizophrenia, the claim should be paid as normal.
If you feel it is important to have full cover, travel agents may offer specialist policies that provide this, but at considerable extra cost. Alternatively, you can choose to take out your own insurance policy – try the companies under ‘Useful contacts’. It usually pays to shop around.
Life insurance policies are designed to cover policy holders in the event of their death.
Many severe mental health problems have both an increased risk of suicide and accidental death and so cover for these conditions can be difficult to find. Therefore, you may find the insurers want to charge you higher premiums because of your mental health condition – or indeed refuse you altogether. If this is the case, the insurer would need to show that your medical condition increases the risk of a shorter life span, and how this is reflected in the increased charges. A medical report from your GP might counteract insurance company concerns.
Car insurers will wish to know about medical conditions likely to affect safe driving. Many insurers allow that provided any medical condition or other disability has been notified to the appropriate licensing authority, and a driving licence has been issued, then they will treat the application no differently from someone without such a condition (all other things being equal).
ABI guidelines give the example of a woman with a diagnosis of bipolar disorder (manic depression). Based on data relating to the risks posed by a person driving when in a manic episode, the insurance company advises her that she will have to pay double the normal premium. However, she produces credible evidence to show that she has been stable on medication for some years and that she has an unblemished driving record. In these circumstances, charging a higher premium is unlikely to be justified, and the insurance company should issue the motor insurance on standard terms with no extra premium.
Home contents insurance
As with other types of insurance, insurers cannot refuse cover unless they can support their decision with reliable data and statistics. There will be few, if any, occasions in which insurers can legally justify charging higher premiums or refusing insurance for home contents insurance on the basis of an applicant’s mental health history.
Income protection insurance
This type of insurance pays out a proportion of your income if you are unable to work. It can prove difficult to obtain if you have pre-existing medical or mental health problems, or have had these in the past. Any claims relating to such conditions would be excluded, although new health conditions would still be covered. For example, if you have a history of severe depression, you may have a policy which excludes claims based on your inability to work arising from depression. But your policy would pay if you were unable to work because you developed cancer.
Some insurers are now either excluding mental health conditions from their policies altogether or restricting the payout period on such claims. This applies regardless of whether the person taking out the policy has a previous history of mental health problems.
Payment protection insurance (PPI)
Payment protection will pay your mortgage or repay a loan if you are unable to work. PPI has been heavily criticised by the Financial Services Authority, which describes it as a profitable scheme for lenders but an unnecessary financial burden for consumers. This type of insurance has been mis-sold to many consumers in recent years. Many people are finding that they have a valid claim for compensation because they did not want or need, or were ineligible for this cover. To make your claim you first need to complain to the firm that sold you the insurance. If this is not successful, take your complaint to the Financial Ombudsman Service.
Making a complaint
How can I make a complaint about an insurance service?
Complaints about any type of insurance service should be made to the insurance provider in the first instance. However, if this is not dealt with satisfactorily, you can then make a complaint to the Financial Ombudsman Service (FOS). The FOS covers all financial services provided in or from the UK.
The FOS receives a large number of complaints, so the process can take a long time, especially if an informal agreement cannot be reached with the insurer. However, 50 per cent of complaints are resolved informally at the earliest stage, and between a third and a half of cases that require a formal decision from the FOS are resolved in favour of the consumer.
The FOS provides a telephone interpretation service for those who prefer to conduct the process in a language other than English, as well as materials in a range of languages. Their materials are also published in Braille, large print and audiotape. (see ‘Useful contacts’).
You may also wish to consider taking advice about possible legal action against an insurer under the Equality Act 2010. You have six months from the action about which you are complaining to start a legal claim in the courts.
The first step is to establish whether the law can help you and whether your case is likely to succeed. You may wish to contact your local Citizens’ Advice Bureau or a local law centre (see ‘Useful contacts’), as this type of service is free of charge.
If you want advice from a solicitor who has knowledge of mental health law and issues, contact Mind’s Legal Advice Service. The Law Society can also advise on suitably qualified solicitors (see ‘Useful contacts’ for details of both organisations).
Insurance guidance and complaints
Association of British Insurers (ABI)
tel: 020 7600 3333
Information and publications for the general public.
tel: 08444 77 20 20 (Wales); 08444 111 444 (England – in development)
Free, confidential and independent advice from over 3,500 locations around England and Wales. Its website can locate your nearest advice office.
Financial Ombudsman Service
South Quay Plaza, 183 Marsh Wall, London E14 9SR
tel: 0845 080 1800 or 0300 1239 123
An independent organisation that deals with individual complaints between consumers and companies that supply financial services.
The Law Society
tel: 020 7242 1222
The Law Society cannot give legal advice, but has an online database of solicitors.
Law Centres Federation
tel: 020 7842 0720
Free legal advice and representation to disadvantaged people. The website has a list of local law centres.
MDF The Bipolar Organisation
tel: 020 7931 6480 (for queries regarding membership)
Charity for people affected by bipolar disorder. It has arranged a travel insurance scheme for members, who should phone for more information. People wishing to enquire about membership should contact the number above.
Mind’s Legal advice service
PO Box 277, Manchester M60 3XN
tel: 0300 466 6463 (9am–5pm, Mon–Fri)
Can provide details of mental health solicitors.
Rethink Mental Illness
advice service: 0300 5000 927
Charity working to help people affected by serious mental illness. The website includes advice about obtaining insurance when you have a mental health problem.
The companies whose details are given below advertise insurance for people who are disabled and/or have a pre-existing medical condition and, in some cases, specifically make reference to people with depression or other mental health problems. However, they may wish to obtain a medical report from your general practitioner or psychiatrist.
Please note that Mind is unable to specifically recommend any of the insurance services listed below and their details are given purely for information purposes. The links below do not generate income for Mind. However, Mind does operate a separate page on Mental health insurance services with links that generate income. This may include companies listed below, although there is no connection between the pages.
En Route Insurance
tel: 0800 783 7245
Specialises in car and travel insurance for disabled people.
tel: 0845 230 5000
Travel insurance for people with pre-existing medical conditions.
Good to go insurance
tel : 0844 334 0160
Travel insurance for any age, with or without pre-existing medical conditions.
The Insurance Surgery Ltd
tel: 0800 083 2829
Finds life, travel and other types of insurance for people with pre-existing medical conditions.
MIA Online Ltd
tel: 01268 783 383
Travel insurance for people with pre-existing medical conditions. Also provides a service for customers to store their medical records online so that they can be accessed from anywhere in the world.
tel: 01424 215 315
Provides non-standard travel and life insurance.
Platinum Financial Consulting
tel: 08450 55 95 65
Can provide help finding life insurance, critical illness insurance or travel insurance for people with pre-existing medical conditions.
tel: 0845 338 1638
Travel insurance specifically for people who are disabled and those with a pre-existing medical condition.
Published by Mind 2012
To be revised 2014
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