Life Insurance and Post-Traumatic Stress Disorder (PTSD)

If you are suffering with post-traumatic stress disorder (PTSD), you are not alone. Nearly 8% of Canadians meet the criteria for probable PTSD, according to a study. 

If you are thinking about securing the financial future of your family, rest assured. A PTSD diagnosis does not necessarily disqualify you from standard life insurance. 

Keep reading to find out more about PTSD life insurance, how insurance companies look at PTSD, and the type of health rating you can expect. 

Key Takeaways: 

• Securing life insurance coverage with PTSD is possible and quite common
• Possible outcomes are being approved with a standard or table rating or a policy denial
• Applying with multiple life insurance companies may improve your chances of getting a affordable rate

How PTSD affects your health

Post-traumatic stress disorder is a psychiatric disorder triggered by a shocking, dangerous, or scary event. Examples include serious accidents, natural disasters, terrorist acts, sexual assault, war, bullying, and domestic violence. 

Common symptoms of PTSD are: 

• Intrusive images or thoughts
• Vivid flashbacks
• Nightmares
• Severe anxiety and panic attacks
• Uncontrolled thoughts about the traumatic event
• Physical sensation like trembling, nausea, sweating, or pain

Most people who experience or witness a traumatic event have temporary difficulty coping. However, with good self-care and passing of time, they usually recover. If the symptoms persists for several months and prevent you from leading a happy, productive life, you may have PTSD.

You should seek help because if left untreated, PTSD can disrupt your whole life — your relationships, your health, and your job. It can even affect your ability to do normal daily tasks. 

Can people with PTSD get life insurance?

A PTSD diagnoses does not automatically rule you out for life insurance. However, like any physical illness, PTSD could affect your options for life insurance and how much you pay for coverage. 

Many people with PTSD have the same options for life insurance as those without it. That means they can buy a medically underwritten term life or a permanent life plan, in addition to no medical exam life insurance policies. 

However, some people with PTSD may not qualify for standard coverage. For instance, some Canadian insurance companies may not be willing to write a term or permanent life policy to a PTSD patient with a history of suicide ideation or attempts. That said, even if your request for a traditional policy is turned down, you will still have the option of buying a guaranteed issue policy. These policies have no medical requirements and hence are easy to qualify for. 

How PTSD Affects Insurance?

How PTSD affects your chances for securing affordable coverage depends on whether it is acute or chronic. When PTSD symptoms last up to three months or less, it is referred as acute. Chronic PTSD, in contrast, is characterized by symptoms persisting for several months, even years. 

A mild form of PTSD combined with a stable work and personal life could help you secure standard rates. However, a severe case of PTSD, especially if has detrimental effects on your ability to work, invariably leads to a table rating. In the worst-case scenario, you may not qualify for standard coverage at all. 

When you apply for life insurance with a pre-existing condition, the insurer will like to know more about it as part of the underwriting process. Underwriting is how the insurance companies determine the level of risk you represent to them and assign you a risk class, which in turn influences your premium rates. 

If you have PTSD, the insurer will review your personal and family medical history, the impact your condition has on your work and personal life, and your overall mental and physical health. Even though every insurer underwrites differently, all are likely to consider these factors “unfavorable”.

• Alcohol abuse
• Occupational instability
• Poor overall health
• Family history of mental illness
• Hospitalization due to PTSD
• Suicide ideation or attempts
• Financial difficulties
• Other mental health disorders 

The fewer of these factors you have, the better your health class rating will be and the less you will pay. However, having some of these factors doesn’t mean a standard policy is out of your grasp. There’s a good chance your application may still be accepted, though you will have to pay more for coverage. 

How much more? That depends on the severity of your condition, among other things. Typically, premiums for people with severe PTSD could be 25% to 250% more than the standard rate. 

Life Insurance options for people with PTSD

Depending on your condition and overall health, you may access to term life, permanent life and no medical life insurance or only no medical life insurance. 

1. Term Life Insurance

Term life insurance is so much easier to understand and often costs just a fraction of permanent life insurance. The way it works is simple: It provides coverage a set period, like 10 or 20 years, and pays out if you pass during the policy term. If you outlive the term of your policy, the coverage terminates, unless you renew it. 

If you are buying a term life plan, make sure the length of the policy term matches your biggest financial obligation. For instance, if you have recently become a parent, you may want to take out a 20- or 25-year term life plan to cover your family until your kid becomes financially independent. 

2. Permanent life insurance 

Permanent life insurance includes features and benefits not found in term life. Where term life insurance has only the death benefit component that is payable until the expiry of the term, permanent life plans, in contrast, offer lifelong coverage and include a savings element.  

Whole life and universal life insurance are the two most common types of permanent life plans. Both combine the death benefit feature with cash value. Whole life insurance has higher premiums than a comparable universal life plan, mainly because it promises a guaranteed cash value growth. In the case of a universal life plan, the cash value growth fluctuates according to the performance of investment accounts to which it is tied. 

Despite being more expensive than term life, permanent life insurance can be a good option for a high-net-worth individual or someone with unique needs. For instance, children with special needs might require parental care long after they’ve become adults. A permanent life policy, which stays in force till the parents’ death, may make more sense in this situation. 

3. No medical life insurance 

As the name suggests, no medical life insurance do not require you to take a medical exam to prove insurability. There are two types of no medical life insurance plans: simplified issue and guaranteed issue. 

Simplified issue is coverage you can obtain quickly by answering a few health-related questions. It is costlier than standard life insurance policies, but is not as expensive as guaranteed issue life insurance, which lets you skip both the life insurance exam and health questionnaire. 

If your PTSD is so severe that it impacts your ability to work, perform day-to-day activities, and affects your personal relationships, guaranteed issue may be your only chance to secure coverage. While these policies have smaller death benefits and a 2- or 3-year waiting period, something is better than nothing. 

Conclusion

Post traumatic stress disorder does not automatically rule out your chances of buying adequate life insurance coverage. In fact, many people with this condition are able to buy traditional life insurance at affordable rates. How much you will pay for PTSD life insurance depends on the severity of your condition, overall health, and your insurer.

Shopping around is your best chance to obtain a low rate since some providers may rate your condition more favorably with others. Dundas Life has worked with many clients with PTSD and can help you secure the right coverage. Reach out to us today to get started.

Frequently Asked Questions

What factors of PTSD influence life insurance in Canada?

The following PTSD-related factors can negatively impact your chances of securing a medically underwritten life insurance policy and cost of coverage: 

• Occupational instability
• Alcohol or drug use
• History of hospitalization and/or suicide ideation  
• Poor financial situation
• Bad driving record
• Other psychiatric disorders
• Family history of psychiatric disorders

What happens if I don’t disclose my PTSD?

When it comes to life insurance applications, honesty is the best policy. Not disclosing a pre-existing condition like PTSD on the application form can have serious consequences, both for you and your beneficiary. 

If the insurer finds out that you had lied, it could declare the contract null and void, leaving you without life insurance coverage. Worse, in the event of a claim, it could refuse to pay the death benefit, depriving your family access to the money they thought was theirs. 

What are the factors insurance companies assess when considering applicants with PTSD?

Insurers will like to know the severity of your PTSD, when it was diagnosed and the treatments you are following. Some of the questions the insurer will likely ask are: 

• When were you diagnosed with PTSD?
• What symptoms are you experiencing? 
• Are you currently receiving any treatment (like medication or psychotherapy)?
• Have you ever been hospitalized because of PTSD?
• Do you have other mental health disorder, like depression or OCD?
• Have you ever taken time off work due to PTSD?
• Are there any serious driving violations (reckless driving, DUI) against your?
• Have you ever tried to commit suicide? 

The insurance carrier will determine your insurability based on your answers to these questions, current health, family medical history, and overall health.  

What are the best options for people suffering from PTSD?

If you have mild, well controlled PTSD, qualifying for standard rates shouldn’t be a problem. Securing medically underwritten coverage with severe PTSD, however, might not be easy. Your best chance is to shop your application around to multiple insurance providers, which an experienced, independent broker can take care of behind the scenes.