Mental health and financial protection


Given the prevalence of mental health problems among the working population – from stress to depression – ensuring you are protected financially in the event that you find yourself unable to work is no bad thing. But before you run out to your nearest insurance broker and sign up for a protection policy, be sure to read the small print first.

Critical illness policies are available either as an add-on to most life assurance policies or on their own, and are designed to protect your income should you get a serious illness, paying a significant tax-free lump sum upon diagnosis.

However, many critical illness insurance policies don’t offer cover for mental health problems. Instead, you might consider looking for an income- protection policy, which guarantees you a percentage of your income for as long as you are unable to work due to injury or illness. The major advantage of such policies over critical illness is that they are not as restrictive and cover mental health problems.

However, as financial adviser Liam Ferguson points out, if you have a history of mental health problems before applying for such a policy, it will be treated as a pre-existing condition and you will be excluded from getting cover if this illness should prevent you from being able to work.

Depression can also be a factor in getting life assurance cover and, unfortunately, can prevent some people from seeking help for fear that it will show up on their medical history, and thus prevent them from getting life cover – or make it more expensive.

However, Ferguson points out that this should not deter anyone from seeking treatment, and that it won’t last forever. “Loading for depression isn’t something you’ll have for all time. Just because you’ve been loaded at one point, it doesn’t automatically mean that you’ll always be loaded,” he advises.