Does your super fund cover you for depression?
Mental health claims through insurance are on the rise.
Up from 5% of total insurance claims over a decade ago, mental health claims have reached 20% or one in five of total and permanent disability insurance claims. They also make up about 18% of income protection (also known as salary continuance) claims.
Mental health conditions are challenging for insurers and can be different to other diseases such as cancer, which can be treated, recovered from and people can return to work. Mental illness can evolve over time with symptoms such anxiety and depression, explains Didier How Yin Fat, pricing actuary for TAL life.
Mental illness is more complicated to diagnose too. Sometimes it is hard for doctors to certify mental illness and find the best way to control it. It can be harder than other diseases to treat, How Yin Fat points out.
Sometimes returning to work can exacerbate mental health problems as it may have contributed to in the first place, explains Richard Land, head of insurance at AustralianSuper, Australia's largest superannuation fund with more than $145 billion under management.
The growing number of mental health claims does pose challenges to the sustainability of the practices of group insurance, says Land, who together with How Yin Fat presented a research paper on mental health and its impact on group life insurance at the Actuaries Summit this week.
Land says it does put pressure on premium rates. Under the MySuper rules, group insurance is mandated and it can't be handled by exclusions and declines.
Land says as the Australian economic cycle weakens and slows, it will impact on insurance because people's financial stress will rise and then lead to more anxiety and mental health issues.
While some personal insurance policies ask for information about pre-existing conditions such as mental illness, big superannuation funds typically offer members automatic cover through group insurance.
And although some insurance companies offer personal insurance using pre-existing conditions, they won't provide mental illness cover if people have had any form of counselling or if a woman has had postnatal depression.
Funds with automatic group insurance often don't ask for any screening information and it is easier to obtain basic levels of TPD and income protection insurance.
Land says when offering group insurance it is important to be fair to the members of AustralianSuper as well as the insurer.
"People do want to get better and our insurance offerings should support this," he says.
While there are fund members that are paid out regular payments under income protection, there is a trend for insurance companies to provide ongoing preventative services and support for fund members with mental health issues.
Land says AustralianSuper has 1100 credited advisers who take calls from members who wish to make an insurance claim to assess their needs and follow up with them.
Land presented three case studies to explain the different sorts of mental illness, treatments and recovery periods.
While people can be helped with special services and return to work within the period set down with an income protection policy - usually two years - others have mental health issues that are longer lasting and they are unable to return to work.
Secondary conditions are common, says Land, which feed into financial stress.
He adds that rather than paying out large lump sums and long-term income protection payments, insurance for mental health problems should include short to medium-term income streams, moderate replacement ratios, waiting periods that encourage rehabilitation and requirements for rehab and preventative health programs.
There are so many ways to help people with personal wellness programs, vocational skills assistance, retraining, relationship building, return to work plans and community support services that are important for insurers to incorporate.
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