Empathy and industry knowledge key to navigating mental health cover

Research released by the Council of Australian Life Insurers (CALI) found that mental ill health is now the leading cause of total and permanent disability claims, making up a third of all claims paid.

For Hayes & Co Insurance Services financial adviser Trish Gregory, this means discussing mental health with clients is key in the broader context of life insurance.

“If you don’t have a mental health condition, people don’t realise how important it is to lock some insurance in straight before you get something, because mental health struggles can come out of nowhere,” Gregory told ifa.

Conversations about mental health, like any discussion of health, require asking sensitive questions. For Gregory, empathy is central to ensuring these discussions are productive.

“I come across all sorts of weird and wonderful medical situations, and people can be quite scared of telling you some really personal stuff,” Gregory said, “So there cannot be any judgement on anything a client tells you.”

Adopting an empathetic approach essentially allows an adviser to be more direct with their client – removing potential obstacles to gaining important information.

Gregory said: “I ask pretty directly, I assume everyone has a mental health condition.

“And I don’t care if they do in the sense that it doesn’t matter. It’s just your information that I need to get you the best outcome.”

She also finds that being seen as someone who is open about her own health, including her mental health, helps create a situation where her clients are comfortable with being open too.

“I’ve talked about my medical stuff publicly … I think that helps clients see me as a safe person who’s non-judgemental and just matter of fact,” she said.

Gregory also advised advisers to stay well informed about policy details, stressing that this is crucial for identifying areas where clients might face exclusions.

She highlighted a common area of frustration: mental health cover being excluded from a life insurance policy.

Namely, she explained, insurers can impose exclusions even if a client’s mental health is well managed, such as when they are receiving professional support, have a family history of mental illness, or have a past diagnosed condition.

Being aware of these nuances allows advisers to guide clients effectively and manage expectations before issues arise, she concluded.

Last month, ahead of the government’s economic reform roundtable, CALI called for “urgent action” to address Australia’s growing mental health crisis.

The organisation, alongside others like Mental Health Australia, backed an open letter to Treasurer Jim Chalmers calling for a coordinated government response, equitable access to care, and investment in the mental health workforce, highlighting the $220 billion annual economic cost of mental ill health.

“Life insurers play an essential role in strengthening Australia’s financial safety net, but by the time someone comes to us, they’ve often exhausted all supports available. They’re really unwell, and it is extremely hard to help them recover and get back to work,” CALI chief executive Christine Cupitt said.

“Even more concerning is the outlook for future generations. Two in five young Australians are affected by mental health challenges, and we’ve seen a 732 per cent increase in claim rates among people in their 30s permanently leaving the workforce due to mental ill health.

“This should not be the story of young Australians experiencing mental ill health.”

In July, the industry body said Australia is “reaching a tipping point” with mental ill-health insurance claims.

Alongside insurers paying out more than $2.2 billion in retail mental health claims in 2024 – almost double the amount paid just five years ago – the latest CALI and KPMG Cause of claims results report found mental ill health is also driving one in five income protection claims, with payouts totalling $887 million last year alone.

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