Mental Illness, Depression and TPD Claims

One of the most common claims for disability insurance in Australia in recent years is for Mental Illness. As such, life insurance companies are becoming increasingly stringent around the requirements for a successful benefit payment. In 2006 alone $206 million paid out in TPD claims in Australia, 20% of which were related to mental illness ( To receive the TPD benefit payment for reasons related to mental illness, the condition must be severe enough for the policyholder to take time off of work.

If an applicant has experienced a mental illness in the past, this will be taken into consideration by the insurance. It can be extremely difficult for underwriters to assess the risks of mental illness as there is such a great range of forms with different degrees of severity. Underwriters in most cases require a medical attendant report in order to assess the applicant’s condition and the level of risk.

Difficulty of Assessment of TPD Claims for Depression and Other Mental Illnesses

Policyholders should be aware that it can be difficult to prove inability to return to work. The episodic nature of mental illnesses can make it difficult to form diagnoses.

Considerations for TPD Claims Related to Depression and Mental Health

  • The type of treatment prescribed by the practitioner and the regularity of that treatment. This consideration is of particular importance for claims that are late in submission.
  • If conditions of the insured are unable to determined. Benefit payment for a mental health claim may defer. This can be prolonged until all treatment options are trialed.
  • Definition of total and permanent disablement in the policy. An underwriter will assess if they would still be able to perform their duties at another place of employment or not.