Sought treatment for mental health? You could struggle to get life insurance

Globe and Mail

25-05-2025

Kyle Moore isn't shopping for life insurance but worries about what will happen should he ever need it.
Mr. Moore, the Halifax-based head of mental health at the League of Innovators, an entrepreneur-focused charity, has overcome mental-health challenges he experienced in the past.
Insurance brokers and disability lawyers say that if someone has been prescribed medication or received counselling for mental-health issues – even in mild cases – they could be denied privately purchased life insurance coverage or face a steep premium. For Mr. Moore, this is 'incredibly disheartening.'
'I've learned that it's standard practice to flag people who are on mental health medication as being one of the reasons to deny or limit their access to life insurance,' Mr. Moore says.
Canadians who have sought treatment for their mental health might not know that they could struggle to secure life insurance. But there are ways to avoid a denial, by ensuring medical stability (no changes in a prescription or condition), working with a broker who's familiar with insurer denial rates, considering simplified or guaranteed life insurance and shopping around.
Courtney Mulqueen, principal lawyer and CEO, Mulqueen Disability Law Professional Corp. in Toronto, says she sees coverage denials regularly – something she finds deeply ironic given the promotion of mental health by high-profile organizations.
'With mental health, there's so much talk about it and everybody's urged to go get treatment,' says Ms. Mulqueen. 'But if you go and talk to somebody because you have anxiety, you have to disclose it,' she says. 'And that puts you at risk in terms of not getting [coverage] or having high premiums.'
More than five million Canadians (18 per cent) aged 15 and older suffer from a mood disorder, anxiety, or substance use disorder, according to Statistics Canada's 2022 data.
According to insurers, most of these applicants succeed in getting some type of life insurance when they apply. Untreated or unstable severe mental-health conditions such as schizophrenia, borderline personality disorder or self-harming may lead to a denial.
'Eighty-five to 90 per cent of our life insurance applicants with mental health issues secure coverage on some basis,' says Karen Cutler, vice-president, head of underwriting, chief underwriter, individual insurance at Manulife Financial in Waterloo, Ont. 'People may or may not feel that they can be insurable, but they should try, because most people are insurable on some basis,' she says.
'Mental health is one of many factors that are considered, and not looked at in isolation,' says Jennifer Dahl, vice-president, chief underwriter and claims risk officer, Sun Life Financial in Burlington, Ont.
Canada Life and the Canadian Life and Health Insurance Association declined to comment for this story.
Nevertheless, Ms. Mulqueen feels too many applicants with mental-health challenges fall through the cracks. She believes underwriting needs to be more nuanced to ensure that severe mental-health conditions are differentiated from mild ones. 'It makes good business sense,' she says.
Many Canadians have at least some life insurance coverage as part of their benefits plan at work, while others purchase traditional, guaranteed or simplified coverage privately.
Premiums vary based on the individual's age, health and lifestyle habits, with a healthy 30-year-old non-smoking male paying around $30 per month for $500,000 in 20-year term life coverage, according to lifebuzz.ca, a news site focused on life insurance. Those with mental-health conditions, if they secure coverage, can pay 50 per cent to 300 per cent more in premiums.
It's why for these individuals applying for life insurance requires planning, 'almost like a pre-approval on a mortgage,' says Parvesh Benning, founder and CEO of Protect your Wealth, a Dundas, Ont.-based life insurance broker.
That's because just one denial stays on an applicant's record. 'Insurers share information with each other and that stays with you pretty much forever,' he says.
To secure coverage, Mr. Benning suggests putting as much time as possible between the treatment of a mental-health issue and an application, as well as having stability of 12 months or more.
Speaking to multiple potential insurers is key. 'Our advice to consumers is to speak to at least three insurance agents or companies to find the option that best suits their individual circumstance,' says Russ Courtney, a spokesperson for the Financial Services Regulatory Authority of Ontario.
Mr. Benning suggests working with an independent insurance broker who knows which insurers are more lenient. They can submit a preliminary assessment to an insurer, to get an idea whether the application will be approved – without that information going on record. And they can shop the application around to multiple carriers simultaneously.
In terms of products, Mr. Benning suggests clients who've had mental-health struggles apply for a simplified plan, which involves fewer medical questions than a traditional fully-underwritten plan, which is an in-depth evaluation of the applicant's health and lifestyle and may involve a medical exam and detailed medical history. The trade-off is a 10- to 40-per-cent higher premium, he says.
For more complex situations, there is guaranteed life insurance, which only requires basic personal information – and no health questions – but is high cost and offers lower coverages. If someone has an extensive history of mental health issues, 'guaranteed issue is another way to secure coverage,' Ms. Cutler says.
For Mr. Moore, opting for reduced or higher-priced coverage because of a mental-health issue seems unfair.
He wants insurers to know that more consideration for mental-health conditions is required. 'People are putting aspects of their most vulnerable selves in front of you to access support,' he says.
'It's about not holding the past against people.'