The underwriter will, in the first instance, look for a full disclosure from the applicant. This wil...
The underwriter will, in the first instance, look for a full disclosure from the applicant. This will usually be with a point of sale questionnaire designed to elicit the key areas of concern. These are date of onset, cause, whether the person is still on treatment and if so, what type. Whether there has ever been any inpatient treatment or a suicide attempt and whether there has been any time off work, if so, when and how long?
Depending on the client's answers, the size of the sum assured and benefits being applied for, it may be possible to accept some applications without having to obtain any further information. This will usually be for short-lived reactive episodes now fully resolved although it may be possible to offer terms if the client is still on treatment if there is a detailed and adequate disclosure.
Because there is often an element of under-disclosure due to the stigma of depression, it is therefore more often than not necessary to obtain a GP's report. Again this would involve a specifically tailored questionnaire similar to the one the applicant is asked to complete. The GP may also be asked to provide a copy of psychiatric reports if there has been a specialist referral. The GP will be asked to comment on the severity of symptoms, whether mild, moderate or severe, any evidence of a suicide attempt, self-harm or suicidal thoughts. He will also be asked to comment on the patient's current state of mind; is the applicant stable and compliant with treatment? Do they have good insight into their condition?
The underwriter will also seek to establish that there are no other factors that will increase the risk posed by the depression. It is not unusual with depression to find a history of alcohol excess or abuse. Eating disorders and even illicit drug use are also sometimes encountered, and these of course will significantly increase the risk.
It is usually possible to obtain enough information from the GP but occasionally, often if the applicant has not been seen by their GP for some time, a medical examination may be obtained with the examiner paying attention to the history of depression and the client's current mental state, mood and insight.
Terms will depend on the severity of the depression and presence or absence of adverse features.
The majority of applicants will usually be accepted at standard rates for life and critical illness cover, provided the history is one of mild depression, even if the client is still currently on treatment, with no suicidal features.
Some applications will attract a constant loading on life cover ranging from 50% upwards if the history is more than mild or with more frequent relapses.
If there has been a suicide attempt, hospital admission or a recent significant severe depressive episode, the application would usually be postponed until at least a year after this. There would then in all probability be a front loading based on so many pounds per thousand pounds sum assured for a set number of years. For instance this could be a £3 to £5 per thousand pounds sum assured rating for 4 years, on a £50,000 sum assured this would be £12.50 to £20.83 extra per month. This is to cover the risk of a repeat attempt being successful and causing a claim. There is a high risk of repeat attempts among those who have attempted suicide once already. A combination of a front loader and a permanent loading may also sometimes be applied.
The underwriter would view more than one suicide attempt or admission with extreme caution. This kind of risk is extremely difficult to predict and unless there was a long period of stability since the episodes it would be very unlikely that any terms would be offered in these instances.
Sickness related benefits such as income protection, total and permanent disability and waiver of premium benefits would be carefully underwritten. If the history were acute and reactive, fully resolved with little or no time off, then full cover with no restrictions or a small loading should be possible provided the history was not too recent. More longstanding, recent or recurrent history of depression would in all likelihood lead to an exclusion being applied where no claim would be paid for any claims relating to anxiety or depression. A history involving frequent relapses with significant periods of time off work may well mean that any sickness related benefits would be declined, especially if the depression is work related.
Depression is a complicated condition to underwrite and each application will be judged according to its individual history. The financial adviser may find it helpful to discuss the application with the insurer's underwriting helpline before submitting the application and if possible ensure it is submitted with the relevant point of sale questionnaire to speed up the underwriting process.
