Can you be denied life insurance if you have anxiety or depression?

We've all had times in our lives when we didn't feel at the top of our game. Maybe it was due to a job loss or the death of a family member; there are numerous reasons for feeling down.

However, according to the National Institutes of Mental Health, for 26.2 percent of Americans age 18 and older this feeling of hopelessness is due to a diagnosable mental disorder. That is approximately 14.8 million adults suffering from a major depressive disorder and about 40 million adults suffering from anxiety.

What's more, a study conducted by the University of Michigan states that in today's faltering economy, job loss and financial strain can lead to depression that lasts up to two years after an individual is employed in another position.

If you apply for life insurance can a history of depression and anxiety can lead to a decline, but often that is not the case.

When applying for life insurance, insurers are interested in an individual's mortality rate and anything that might prematurely shorten their life. Insurers generally ask a potential policyholder to provide a personal and family medical history, in addition to answering questions about the types of "risky" hobbies the policyholder participates in, such as scuba diving or rock climbing. The information provided can red flag an underwriter into giving the application a second glance in order to determine if they should assign a waiting period (before the person can apply for life insurance), deny coverage or offer a "rated" policy.

In most cases, depression and anxiety counts as a "pre-existing" medical condition on a life insurance application. So if you are overweight, smoke, skydive regularly, and happen to be depressed, you would have a higher mortality rate than a fit and trim nonsmoker who has a less exciting hobby and a better state of mind. In fact, a recent study by the Netherlands Institute of Mental and Health Addiction found that mortality rates for those with depression are significantly higher than those in mentally healthy individuals.

This is not only due to risk factors such as suicide, but to the toll that depression takes on the body, which can include high blood pressure, heart problems, and decreased immune function. This translates to someone who isn't eating right or not at all, sleeping poorly and not exercising. When you couple this with a higher rate of drug and alcohol abuse among those who are depressed, this can bring a number of additional medical concerns.

Insurance companies generally consider the criteria for a major depressive disorder to be a history of depressed mood for at least two weeks, in addition to four or more symptoms that include changes in weight, sleep disturbances, feelings of worthlessness or guilt, problems with concentration and suicidal thoughts.

Allen Hixon, manager, State Farm Life Insurance Company, says standard rates would still be available for applicants who have a "mild" bout with depression. "Generally, preferred rates are not available for some period of time following a diagnosis, but when they are, it would be for individuals who have responded well to treatment. They would also have to demonstrate an excellent medical outcome for some period of time, but this varies by severity, from the date of diagnosis," says Hixon.

Ryan Pinney, brokerage director for Pinney Insurance Center in Roseville, Calif., agrees, "In more severe cases or for those who have a history of suicide attempts or hospitalization, [there would be] a rating or possible decline. The rating or decline would be determined by how long ago these issues occurred; the longer the better. If it is more than five years, then the rating would be in the low category." Pinney suggests contacting multiple companies to find a better rate and working with a firm or agency familiar with depression and mood disorders.

Those suffering from anxiety have a slightly easier time obtaining life insurance, but are still considered a risk by life insurers. In most cases, insurers will offer a standard rate for someone that suffers from anxiety or panic attacks, but preferred rates would not apply in this case.

Pinney says, "By itself [anxiety] is normally a non-issue and therefore not ‘rateable' for insurance companies. Where it does become an issue is when medications and treatment is prescribed. Often the medications used to treat anxiety are the same as those used to treat some forms of depression. This blurs the line between the two from the underwriter's perspective and may cause them to take a closer look and ultimately rate anxiety cases."

Pinney suggests if you suffer from depression or anxiety, tell your insurance broker upfront. There are no set rules when it comes to insuring those suffering from depression or anxiety and if your broker is aware upfront, it can be worked into your quote.

You may not be eligible for the coverage you wanted but you may not be excluded from coverage altogether.

"An individual may be temporarily declined coverage if they've been recently diagnosed. This is because there is usually insufficient medical information and treatment history available to determine if his or her prescribed treatment is effective. Normally, this would be within the first three to six months after being diagnosed," advises Pinney.

If you have been under a physician's care for an extended period of time without incident, chances are greater that your insurance coverage will be less of an issue.

You may need a letter from your physician explaining your situation and how you are reacting to treatment along with documentation showing what triggered your depression and what you did to control it. But, if your medical records show that you were proactive, your chances of obtaining coverage may increase.

Pinney reminds us that manic and chronic depressions are actual medical diagnoses that would be based on his or her specific conditions. "Someone who has experienced a ‘rough patch' would be defined as someone with a transient issue that is causing his or her anxiety or depression," says Pinney.

Examples of these would be the recent loss of a spouse or loved one, bankruptcy, divorce, and financial or legal issues.

"Insurers are usually pretty good at identifying these differences and can often make exceptions to their rules and guidelines, if they are given a specific and compelling reason to do so. This would normally come in the form of a letter from the individual, individual's doctor, or the insurance agent involved. Pinney explains that this is generally a cover letter that would explain any issues or problems that may have contributed to the depression or anxiety.

"At the end of the day, the insurance carriers will be considering the medical records of the proposed insured, his or her medical exam, and any additional records or cover letters provided. Again, the more detailed and compelling the information, the better chance that the individual will be able to receive the most favorable rate class."

How are you rated?

One major life insurance company offers a non-rated policy to someone who has "mild" or "occasional" anxiety and depression. The following criteria must be met:

MILD DEPRESSION OR ANXIETY

No suicidal ideation for at least one year

Can perform normal activities with minimal symptoms

No more than two medications (no antipsychotic medications) for anxiety or depression

No hospitalizations, suicide attempts or disabilities for at least nine years

MODERATE DEPRESSION OR ANXIETY

TABLE-B rating No thoughts of suicide for up to six mos.

Perform normal activities with moderate symptoms

No more than three medications, (no antipsychotic drugs)

One incident of short-term disability

No hospitalizations or suicide attempts up to nine years

SERIOUS, SEVERE DEPRESSION OR ANXIETY

Anything more severe or significant that might require antipsychotic medication

Suicide attempts, hospitalizations, long-term disability, decline for the first year during recovery

After recovery, the applicant would receive a table rating depending on the number of years they have been successful in their recovery, the amount of time since their last episode, and proof that they've adhered to the proper treatment from a licensed doctor or psychiatrist.