Insurance

Here’s some top things to know about insurance and mental health:

• You may find that standard insurance policies will not cover you if you have a mental illness. You might have to buy a more expensive policy to get the cover you need.
• It is illegal for an insurer to refuse to give you insurance cover because of your mental health. Unless they can give evidence that you are more likely to make a claim.
• You can make a complaint to the insurance company if you feel you have been discriminated against because of your mental illness.
• You could take your complaint to the Financial Ombudsman Service and the Equality and Human Rights Commission.
• You may be able to take legal action against the insurance company.
• Some insurance companies will give you insurance cover even if you have a pre-existing medical condition.

What are my insurance rights?

It is illegal for insurance companies to refuse to offer you insurance or offer you worse terms because of your mental illness.

However, an insurance company can refuse to insure you or charge you higher premiums if they can show that you are a high risk. This isn’t discrimination.

An insurance company should do a risk assessment to work out how likely you are to make a claim. They should ask you questions about your history and current situation. They will also look at reliable information such as statistics. 

The Data Protection Act gives you the right to get a copy of the information held about you in a form that you understand. The act also allows you to ask for the logic behind why a decision was made about you. You can appeal the decision if you don’t agree with it.

Insurance companies should not have a blanket policy to refuse insurance to a certain group of people. Using untested assumptions, stereotypes or generalisations can lead to unlawful discrimination.

An example of how insurance can work

Here is an example to illustrate:

Becky has a history of psychosis. She is going on holiday to Spain and talks to an insurance company to get travel insurance. The company ask about Becky’s mental health history, and also ask about how Becky is managing her condition at the moment. The company risk assess how likely Becky is to make a claim based on her personal circumstances, and by looking at reliable information, such as statistics on psychosis. Becky has been well for 3 years by taking medication. As such the insurer decides to offer Becky insurance, but they charge her a higher premium.

You don’t necessarily have to disclose your mental illness to an insurer, but you do have to answer questions honestly. Not answering question honestly is called misrepresentation. If you misrepresent yourself there could be consequences such as the following.

• Your insurance becomes invalid, and if you make a claim your insurer won’t pay out.
• Your insurance is cancelled.
• It may be more difficult for you to get insurance in the future.

The Consumer Insurance Act gives you legal protection if you unknowingly give incorrect or incomplete information to your insurer. This means your insurer will not be able to decline a claim if you didn’t tell them something unless you deliberately lied or misrepresented your circumstances.

Are there any rules or guidelines insurers should follow?

Financial Conduct Authority

Insurance is regulated by the Financial Conduct Authority (FCA). Their rules say that an insurance company should:

• Try to make sure that you only buy a policy that you can claim under,
• Give you information about how to complain if you need to, and
• Deal with claims quickly and fairly.

Equality Act 2010                           

The Equality Act protects people with ‘protected characteristics’ from unfair treatment. Unfair treatment is known as ‘discrimination’.

Having a mental health disability, which has a big effect on your life is an example of a protected characteristic.

The Equality and Human Rights Commission have created a webpage which has some examples of unlawful discrimination from services.

What do I do if I am discriminated against?

Think about the following options if an insurer has discriminated against you because of your mental health problem.

Make a complaint

Complain directly to the insurance company first. You can take your complaint to the Financial Ombudsman Service (FOS) if the insurance company hasn’t dealt with your complaint properly.

Take legal action

If you decide to take this route, you will need to seek advice from a solicitor. Try to find a solicitor who specialises in both insurance and disability law. You can search for solicitors in your local area by speciality. The Law Society website has a filter which you can use to do this.

If you don’t have access to the internet you can call the Law Society. They can help you to find the right sort of legal advice, and a solicitor will be able to tell you if you have a case which may be successful in court. You will then usually have to pay fees if you take legal action.

What are the different types of insurance?

Below is a list of the most common types of insurance that are available to buy.

Remember that an insurance company might refuse to insure you. Or ask you to pay more if they have reliable information to show that you are likely to make a claim because of a pre-existing medical condition such as a mental health condition.

A pre-existing medical condition may also apply to symptoms which you have already seen your doctor about before buying the insurance, even if you haven’t been diagnosed yet.

Life insurance

Life insurance is paid out to your loved ones if you die. This can be paid as a lump sum or smaller payments over a period of time. Often life insurance will have certain rules in their policy about when they will pay out. For example, if you died because of alcohol or substance misuse this may invalidate your policy.

Not everyone needs life insurance. But if you have people who depend on your income you may want to think about it.

Critical illness insurance

Critical illness insurance will usually pay out a lump sum to you if you are diagnosed with a specific illness. Check what the policy covers before you take out critical illness insurance. Not all conditions will be covered.

Health insurance

Health insurance offers a way to pay for private health treatment if you become unwell. This could include medication, talking treatment or operations. Some policies may include an exclusion clause for conditions that develop during the first few years of the policy. This means that if you develop a certain condition within this period the insurer will not pay out.

Income Protection Insurance

This is a long term insurance policy that can help you if you can’t work because you’re ill or injured. It’s there to make sure that you get a regular income until you retire or you’re able to return to work again. It usually does the following things:

• Replaces part of your income,
• Pays out until you can work again, retire, or die, or the end of the policy term,
• Only pay out when other policies stop protecting you such as company sick pay,
• Cover most illnesses that leave you unable to work, and
• Allows you to claim as many times as you need to.

You may want to think about this sort of policy if you:

• Don’t get employee sick pay,
• Don’t have savings,
• Don’t have people who can support you, or
• Couldn’t pay your bills on state benefits.

Travel insurance

Most standard travel insurance policies don’t cover pre-existing medical conditions. An example of standard travel insurance may be the type that a travel agent sells to you at the time of booking the holiday.

Sometimes insurers will not give you cover if you have been in hospital for a mental illness for a period of time before your date of travel.

It is unlikely you will get travel insurance if your doctor has advised you not to travel.

Arrange your travel insurance as soon as you can after booking your holiday. Depending on your policy, this could cover the cost of your holiday if you become unwell leading up to your holiday and you aren’t able to go. This is called cancellation cover.

Do I need travel insurance if I have a European Health Insurance Card?

An EHIC will entitle you to the same state-provided healthcare in another European Economic Area (EEA) country or Switzerland. As long as the trip is temporary and not specifically to get treatment for a condition.

This doesn’t mean that you will get free healthcare. It depends on the local rules of the country that you visit. With an EHIC you are treated the same as local people. This means if they pay towards their healthcare, you will have to pay too.

Travel insurance can cover the whole cost of healthcare. It can also cover other areas such as delayed flights, lost baggage and cancellation costs.

How do I get an EHIC?

You can apply online for your EHIC. Be aware that there are sites who will charge you a fee to get a EHIC. Do not use these websites. It is free to get your own card.

You will be able to get an EHIC even if you have a pre-existing medical condition. Most people who live in the UK will be able to get an EHIC.

Motor insurance

You should be able to get motor insurance if you have a driving licence and you are safe to drive. Sometimes you won’t have to disclose your health to your insurer, but always check the policy. Even if they haven’t asked to know about your condition there may be a clause in the policy to state that you have to tell them. If you don’t follow the rules of your policy your insurance may not pay out if you make a claim.

Payment Protection Insurance (PPI)

Payment Protection Insurance (PPI) pays out if you can’t make payments on loans, such as your mortgage, or credit cards because of illness or redundancy. Check the policy for rules about a pre-existing medical condition. Usually PPI won’t cover certain illnesses.

You may want to think about this sort of policy if you:

• Don’t get employee sick pay,
• Don’t have savings,
• Don’t have people who can support you, or
• Couldn’t pay your bills on state benefits.

Is there anyone who can give me advice about insurance and mental illness?

An insurer should be able to give you specific information about their policy. And if it will cover your needs. You can contact an insurance broker if you would like advice about who to take out your insurance with, however, you may have to pay a fee for an insurance broker.