Now, perhaps more than ever, financial advisers are critical to the appropriate handling of a client’s mental health and wellbeing. Personal insurance has a strong and unique role to play in supporting those who need the financial foundations to recover.
Yet, various myths and misconceptions about insurance products may hold clients back from asking the right questions or taking out a policy. This is not an ideal situation; particularly where mental health issues are concerned.
Having an informed, open conversation is a good place to begin.
The 2020 year will of course be remembered for the impact of the global COVID-19 pandemic. Physical and mental stress has taken a huge toll on all, with large numbers of Australians suffering not only in terms of their health, but also their financial and emotional wellbeing.
Key drivers in mental health deterioration have come from the change in people’s usual activities, routines or livelihoods. This includes enforced government lockdowns, quarantines, companies requesting employees to work from home or workers having to go part-time, or in the worst cases being stood down temporarily or permanently. Each of these factors have contributed to increased levels of anxiety, loneliness and depression.
If a stressful time is anticipated, such as the March 2021 cessation of JobKeeper potentially resulting in unemployment, a proactive, holistic approach to ensuring mechanisms are in place when these stressful triggers occur is recommended. These may include increasing physical exercise and reducing alcohol & other forms of stimulant intake. Small, positive changes can make a substantial difference to the impact of stressful events on mental health and therefore the impact on a future life insurance application.
But how can advisers specifically help?
Advisers can encourage their clients to seek out true preventative counselling, rather than waiting until a stressful time or incident occurs. This has substantial benefits in preparing clients mentally and emotionally for when a mental health trigger may occur.
Presently, there may be concerns for example around access to essential services and continuity of treatment for people with developing or existing mental health conditions. The federal government has provided additional support to all Australians by boosting the number of subsidised psychological therapy sessions available as part of its response to COVID-19.
In addition to this, it is crucial to emphasise to clients the practical tip that providing well-documented health histories are more likely to lead to better insurance application outcomes. The more detailed, specific information provided, the clearer an understanding the insurer can have of the client’s health history. Existing mental health issues do not necessarily mean that a client will be excluded from being issued life insurance cover.
If a client already suffers with mental health illness, why should they still purchase personal life insurance?
It is important for advisers to educate clients suffering from mental health issues that mental health claims account for a lot of ‘noise’ but make up a lesser proportion of actual claim numbers, as highlighted in a recent FSC/KPMG study that found mental health claims make up 10 per cent of income protection claims for men and 22 per cent for women.
It would benefit clients to know that they are more likely to claim for injury or illness not associated with mental health illness. Having personal insurance in place can help reduce anxiety around financial security if a sickness or injury, trauma or unforeseen tragedy occurs. This therefore provides more peace of mind and security for those clients who are more inclined to struggle with mental health illness.
Even if an applicant has sought treatment or counselling for mental health concerns (and potentially has a mental health exclusion), the customer can still potentially be covered for all the various types of insurance i.e. life, total and permanent disability, critical illness and income protection. As the data shows, the mental health claims for life and income protection insurance are significantly outweighed by claims due to cancer, accident, heart attack/stroke and musculoskeletal conditions. The study found only a disproportionate representation of mental health claims for total and permanent disability insurance.
It is important that advisers communicate this to clients who have experienced mental health issues, so as they are not dissuaded from looking into personal insurance as the benefits of the personal insurance are not necessarily negated by a potential mental health exclusion.
What role does the insurer play?
For our part as an insurer it is about electing to adopt an individualised, holistic approach in underwriting assessments. We work very closely with the advisers guiding their clients. As a mutual insurer, we have a greater interest and capacity to invest the time in undertaking individualised assessments to obtain a balanced and holistic view of an applicant’s health. This approach would be a greater challenge to a larger insurer who in order to manage their larger book would need to adopt a more standardised approach to its underwriting assessments.
In practical terms, our approach is to review applicants on a case by case basis and take a pragmatic approach. As all our underwriting and claims assessors are trained to provide an empathic approach to the assessment of an application or a claim, this results in a unique approach to the assessment. In particular, in the case of prior mental health issues we seek to understand the impact of the mental health issues on the person; how they are managing; and if the applicant sought any proactive measures prior to symptoms occurring or a diagnosis to reduce levels of anxiety and stress. The assessment therefore will balance both positive and negative factors needed for consideration of cover, which benefits will be offered and under what conditions. As our primary goal is to provide a best outcome for the client at all stages, we always recommend providing transparent and complete information when speaking with an insurer.
The long- term implications in obtaining personal insurance for a client seeking help from his or her GP concerning mental health, will always depend on how each individual insurer views the ‘real world’. PPS Mutual understands and accepts that there are unprecedented levels of stress due to the COVID-19 pandemic and we would naturally take that into consideration in future applications. It will not necessarily result in an automatic penalty to your underwriting assessment.
The approach that we practice is currently under consideration to be mandated to Life Insurers through the Life Insurance Code of Practice. Mandating this philosophy will be of significant benefit to the industry. Putting it into practice, however, will pose a greater challenge to the larger insurers whose operations are generally set up for a standard ‘cookie-cutter’ assessment.
Marcello Bertasso, head of underwriting, PPS Mutual
If you or someone you care about needs support, please contact:
Lifeline 13 11 14
Suicide Call Back Service 1300 659 467
MensLine Australia 1300 78 99 78
Beyond Blue 1300 22 4636
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