Life Insurance & Mental Health: Quick Guide

See affordable life insurance quotes from PolicyMe and other top companies.

Written by: Jasmine Kanter
Insurance Writer
Edited by: Helene Fleischer
Content Marketing Manager
Updated
July 3, 2026

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Key Takeaways
  • You can get life insurance coverage with a mental health condition, especially if you’ve been stable for a year or more.
  • Your diagnosis, medical history, and how you manage your condition affect your life insurance rates, eligibility, and policy exclusions.
  • Applying for fully-underwritten life insurance allows you to supply details about your condition and qualify for the lowest rates possible.
  • No medical policies (like simplified and guaranteed issue) may help you get coverage with fewer health questions and no medical exam, but they cost more.

How does mental health affect life insurance?

Mental health issues can pose a risk to overall health, so insurance providers consider your mental health history (and mental health support!) important parts of the life insurance application process. 

If you’re applying for a fully underwritten standard life insurance policy, you may be asked about  these risk factors to form a picture of the stability of your condition: 

  • Ability to complete daily living activities
  • Age at diagnosis
  • Diagnosis and severity
  • History of hospitalizations or time off work
  • History of suicidal thoughts or suicide attempts
  • Medical history
  • Most recent mental health episode
  • Overall number of mental health episodes
  • Substance use
  • Treatment plan, including medications and/or therapy

A medical history without any recent medication changes, episodes, hospitalizations, or time off work requests can help you get approved and qualify for lower rates.

If you're concerned about qualifying, it's still worth applying for fully underwritten life insurance first. If traditional underwriting isn't the right fit, simplified issue and guaranteed issue life insurance may provide alternative ways to get coverage.

Simplified and guaranteed issue applications ask fewer or zero health questions, making approval easier for some people. Expect higher premiums and a lower payout cap than traditional plans.

How does mental health affect life insurance approval?

Every life insurance provider uses a different set of rules to approve or decline potential customers, but the two most important factors in approval are generally stability and recency.

Stability: Insurers tend to prefer clients with consistent, long-term treatment plans with few medication changes, and an absence of hospitalizations or time off work requests. One or two years is generally sufficient to qualify for lower rates.

Recency: You may be denied if you’re currently hospitalized, taking time off work, or experiencing a mental health episode, especially if you’ve just been diagnosed. Although it’s true life insurance rates increase with age, in this case, the best course of action is to focus on recovery and wait a year or two before applying.

Some diagnoses are considered more risky than others, like schizophrenia, bipolar disorder, and eating disorders. 

How does mental health affect life insurance premiums?

Depending on the severity and stability of your medical condition, you may be approved as a high-risk life insurance customer and get a “rating”. Ratings are categories used to indicate the level of risk of non-standard customers, and are accompanied by a premium increase.

For example, a standard customer posing an ordinary amount of risk might cost $100/month, while a non-standard customer with a mild condition might be rated A or 1 and charged $125. A person with a severe condition or multiple suicide attempts may be rated up to J or 10, which carry premiums of $350+/month.

As a general rule of thumb, if your diagnosis is mild and/or your last mental health episode was at least one year ago, you may qualify for standard premiums.
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Life insurance rating system for high risk applicants
Based on an example base premium of $100/month
Rating Class
% Increase
Final Premium
A or 1
+25%
$125
B or 2
+50%
$150
C or 3
+75%
$175
D or 4
+100%
$200
E or 5
+125%
$225
F or 6
+150%
$250
G or 7
+175%
$275
H or 8
+200%
$300
I or 9
+225%
$325
J or 10
+250%
$350

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Can my rating improve if my mental health condition improves?

Depending on the insurer, you may be eligible for a lower rating or standard rates if your condition has been stable for a year or two. You can ask your life insurance advisor to flag your file for reconsideration or make a note to yourself to update them in the future.

How does mental health affect life insurance payouts?

There are three major mental health-related reasons your life insurance policy may not pay out:

Reason for denial
Explanation
Death occurs during the contestability period
If you pass away within the first two years of your policy (the contestability period), your insurer may review your application to confirm it was completed accurately and honestly. If they don’t find fraud or material misrepresentation, your beneficiaries are generally still eligible to receive the death benefit. After the contestability period, most policies become incontestable for ordinary application mistakes. As long as premiums are paid and no policy exclusions apply, insurers typically don’t deny a claim just because of non-fraud errors on the application. They may still review or deny a claim in certain situations, like fraud, non-payment of premiums, or if the policy has specific exclusions.
Suicide within the first two years
Most life insurance policies include a suicide clause, which means that if you die by suicide within the first two years of your coverage, the death benefit usually isn’t paid out. Instead, your beneficiaries typically receive a refund of the premiums you paid into the policy up to that point. After the first two years, coverage for death by suicide varies by insurer and policy wording. Some policies cover it after the clause expires, while others may continue to list it as an exclusion. It’s important to review your specific policy to understand how this applies to you.
Cause of death is excluded from policy
A policy exclusion is a clause that limits coverage for certain causes of death, such as specific medical conditions or high-risk activities. For example, if you live with post-traumatic stress disorder (PTSD), an insurer might approve your application but exclude PTSD-related causes of death from coverage. Exclusions generally remain in place for the life of the policy. If death is directly caused by an excluded condition or activity, the claim may not be payable under the policy and, in many cases, no death benefit or premium refund is provided. The exact treatment depends on your insurer and the terms of your contract.

Contestability periods and suicide clauses are standard fixtures in the life insurance industry. The intent is to prevent insurance fraud and discourage applicants from harming themselves for financial gains.
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Mental health resources

Mental health resources If you or someone you know is struggling with suicidal ideation, contact Talk Suicide Canada at 1-833-456-4566 or text 45645

What’s the best life insurance if I have a mental health condition?

When it comes to policy features, the best type of life insurance depends more on your financial goals than your mental state. 

The only advice we’ll add to the term versus permanent debate is that term life insurance is generally more affordable and easier to manage, which can save you a lot of stress over time. 

When it comes to underwriting, the best type of life insurance depends on how much medical information you’re willing to provide. Underwriting is the process of assessing a customer’s risk of mortality; the more underwriting involved, the more information required to apply.

Despite the extra effort involved, we recommend applying for policies with more thorough underwriting, for reasons we explain below.

What are the advantages of fully-underwritten life insurance?

Fully-underwritten life insurance often requires a medical questionnaire and may include an in-person medical exam. Because it gives insurers a full picture of your mental and physical health, it often results in more coverage and lower premiums.

According to the Canadian Life and Health Insurance Association, around 96% of life insurance applicants get the coverage they apply for and qualify for standard rates. You may be pleasantly surprised by the rates you’re offered for a fully-underwritten policy, and it doesn’t stop you from applying for no medical products later.

Pros:

  • $10,000-$30 million in coverage available for a 10-30-year term
  • Available to ages 18-80
  • Premiums average $37/month* for term coverage

Cons:

  • Medical exam may be required

* For a 20-year term life insurance policy with $500,000 in coverage for female non-smokers between 30-49

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What are the advantages of simplified issue life insurance?

Simplified issue life insurance requires a short medical questionnaire and no medical exams, hence the term “no medical life insurance”. Simplified issue policies target clients considered too risky for traditional life insurance, and tend to be pricey as a result.

Pros:

  • Available to ages 18-70
  • Shorter medical questionnaire
  • No medical exam required

Cons:

  • Only $10,000-$1 million in coverage available
  • Premiums average $73/month* for term coverage

* For a 20-year term life insurance policy with $500,000 in coverage for female non-smokers between 30 - 49

What are the advantages of guaranteed issue life insurance?

Guaranteed issue life insurance falls under the no medical insurance umbrella and is available to almost anybody. It allows high-risk customers who have been declined for other policies to get a limited amount of coverage in exchange for higher premiums.

Pros:

  • Available to ages 18-75
  • Only basic medical information required
  • No medical exam required

Cons:

  • Only $3,500 - $100,000 in coverage available
  • Premiums average $126/month* for permanent coverage

* For a permanent policy with $50,000 in coverage for a 45-year-old female non-smoker

Looking for coverage without a medical exam? See if PolicyMe Guaranteed Issue Life Insurance is right for you.

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What happens if I omit my mental health condition from my life insurance application?

Feeling anxious about applying for life insurance with a mental health condition is understandable, as is the temptation to omit or downplay information. 

If you omit information:

  • At best: Your premiums may be adjusted after the missing information comes to light. 
  • At worst: Your policy could be cancelled or your beneficiaries could be denied the financial protection you wanted them to have

It’s not worth your peace of mind or your loved ones’ financial security to hide mental disorders. Purposefully misrepresenting or withholding information on a life insurance application is fraud, and providers use various means to detect and deter it.

How to qualify for life insurance with a mental health condition

Putting it all together, how do you set yourself up for success in protecting your family’s financial future? We consolidated the advice from around the internet into a four-step process:

  1. Pick your timing: You’re more likely to be approved after maintaining a consistent treatment plan with no hospitalizations or time off work for at least one year.
  2. Choose a product: If you can tolerate a 20-minute application and a potential medical exam, try applying for fully-underwritten life insurance first. Consider simplified and guaranteed issue products if you’re willing to pay more or you’ve been declined.
  3. Do your research: Contact potential life insurance providers to ask about the guidelines surrounding your mental health condition. Search online reviews and forums to get an idea of the risks a given company is willing to insure.
  4. Submit an application: Submit one application to the company you’re most confident about and wait for an answer. It’s safer to compare life insurance quotes after you’ve received approval (or conditional approval) from at least one company.

With a little research and understanding, most Canadians with mental health challenges can qualify for some form of coverage. 

FAQ: Life insurance & mental health

Jasmine specializes in converting complex insurance data into actionable guidance. Her background includes auto, life, and health insurance and financial planning. Lately, she’s leveraging AI to extract insights from the numbers and help Canadians make better decisions.

Jasmine specializes in converting complex insurance data into actionable guidance. Her background includes auto, life, and health insurance and financial planning. Lately, she’s leveraging AI to extract insights from the numbers and help Canadians make better decisions.