The messy truth about mental health and insurance
Is mental health stopping you from getting insurance?
If you’ve ever worried that talking to your GP about anxiety or stress might mess up your chances of getting insurance, you’re not alone. Mental health and insurance often get tangled up in confusing rules, exclusions, and plenty of myths. Some people even feel like the system is discriminating against them — but is that really the case?
In a recent Deep Dive chat, Ash and Phil unpacked how insurers actually look at mental health, why exclusions exist, and what it means for young Aussies trying to get cover. Spoiler: it’s complicated, but it’s not hopeless.
Why young Aussies are unsure about disclosure
A Canstar survey found 43% of Australians thought seeing a doctor for mental health wouldn’t affect their insurance, but 38% admitted they’d consider not disclosing it at all (Source: Canstar). The problem? Not disclosing is risky. If you leave something out and later need to make a claim, your policy can be voided.
“Don’t skip treatment because you’re scared of the paperwork — that’s the worst outcome.”
The hesitation makes sense though. We’ve been told to “be open” about mental health, but at the same time, people worry honesty could cost them financially. That tension is what leaves many young Australians stuck in limbo.
How insurers actually view mental health
Here’s the kicker: insurers don’t look at mental health the way doctors do. While your GP might view stress, anxiety, and grief as part of a wide spectrum, insurers tend to separate things into risk categories. If your history suggests higher claim likelihood, they might apply exclusions — often for income protection or TPD cover.
But is that discrimination? Legally, no. The Disability Discrimination Act allows insurers to make decisions based on reliable statistical data. If the numbers show higher risk, they can act on it. That said, exclusions aren’t always permanent.
💡 Mental health claims for Australians in their 30s and 40s have jumped from $37 million in 2013 to $138 million in recent years (Source: APRA).
“Insurers can put exclusions in place, but they have to justify it with data — it’s not just guesswork.”
Can you still get cover with a history of mental health?
The short answer: yes, sometimes. If your symptoms were years ago and you’ve had no ongoing treatment or episodes, you might qualify for standard cover. The timeline varies — sometimes one year, sometimes up to five — depending on the severity.
That’s why working with an adviser matters. They can help you navigate which insurers have more flexible views and whether a pre-assessment makes sense.
Real example: Ash spoke about clients who disclosed mild anxiety from uni days. Because there hadn’t been any medication or treatment for years, they were still offered standard income protection.
Why young people shouldn’t delay treatment
One of the hardest takeaways from the discussion? Some people avoid getting help because they’re afraid of what it will mean for insurance. But delaying treatment can backfire — both for your health and your finances.
💡 Stat to note: Nearly 1 in 2 Australians will experience a mental health condition at some point in their lives (Source: Australian Institute of Health and Welfare).
If you’re skipping therapy or medication because of “what ifs” with insurance, you could make things worse down the line. The key is finding cover that works with your history, not against it.
“Don’t sacrifice your wellbeing just because you’re worried about a line in a policy.”
The future of mental health claims
Insurers are still trying to figure out how to sustainably cover mental health. With claims rising, one proposal is to pay TPD claims in instalments instead of lump sums. That way, support continues over time, but insurers also reduce the risk of large one-off payouts.
It’s not here yet, but the conversation shows the industry is shifting. For young Aussies, that could mean fairer access in the long run — though it’s a balancing act between affordability and protection.
So, is it discrimination?
The word “discrimination” gets thrown around a lot, but in this context, it’s tricky. Exclusions and conditions can feel unfair, especially when mental health is so common. But under the law, if insurers have data to back up their decisions, it’s considered legitimate risk assessment.
That doesn’t make it any less frustrating. What it does mean is that the system isn’t always as black-and-white as “you can” or “you can’t” get cover. There are often shades of grey, and with the right advice, options are usually on the table.
The takeaway
Mental health and insurance is one of those topics that sits at the crossroads of stigma, money, and wellbeing. It’s not perfect, and it’s not always fair, but it’s also not a dead end.
If you’re in your 20s or 30s and worried about how your mental health history could affect your cover, don’t assume it’s game over. Be upfront, ask questions, and get advice. Because at the end of the day, your wellbeing is bigger than a policy.
“It’s not about hiding things — it’s about finding cover that fits your story.”
Resources
Canstar (2024): Survey on mental health disclosure and insurance.
APRA (2023): Mental health claims statistics in life insurance.
Australian Institute of Health and Welfare (2024): Prevalence of mental health conditions in Australia.