If you’ve ever needed time off work for anxiety, depression, burnout or another psychological condition, you’ll know the impact it can have, not just on your wellbeing, but on your income. It’s a growing concern too. More Australians are taking leave due to mental health issues than ever before, and for some, that’s where income protection insurance steps in.

But can it actually cover time off due to mental illness? The short answer is yes, though it depends on your policy, the severity of your condition, and how your insurer assesses your claim. It’s not always straightforward, but it’s worth understanding your options.

For more information on income protection insurance, read this. 

Types of Mental Health Conditions Commonly Covered

According to a National Study of Mental Health and Wellbeing, approximately 42.9% of Australians aged 16-85 have experienced a mental disorder at some point in their lives. In fact, mental health conditions have emerged as the leading cause of income protection and total and permanent disability (TPD) claims for several years. 

This alone underscores the significant impact of mental health conditions on the Australian workforce and the importance of income protection insurance in providing financial support during periods when individuals are unable to work due to mental health issues.

While income protection insurance is typically associated with physical injuries or illnesses, most comprehensive policies also cover a range of mental health conditions. This typically includes:

• Depression, one of the most common claims, especially when severe and diagnosed by a medical professional.
• Anxiety disorders, generalised anxiety, panic disorders, and social anxiety may be covered if symptoms significantly impair your ability to work.
• Post-Traumatic Stress Disorder (PTSD), often linked to trauma, including workplace incidents, and must be diagnosed by a psychiatrist or psychologist.
• Bipolar disorder, this tends to involve stricter conditions and more frequent reviews, but is often eligible under long-term claims.
• Adjustment disorder and burnout, while harder to prove, these are increasingly recognised as valid causes for extended sick leave.

Not every policy covers all of the above, and some may include mental health exclusions unless disclosed during the application. The key is transparency: if you’re upfront with your medical history when applying, you’re more likely to be covered down the line. 

Policy Terms to Be Aware of 

This is where things get a bit nuanced. Just because a policy can cover mental health doesn’t mean it will, or that it will do so without a few caveats. Here are a few things to watch for:

• Exclusions, some insurers still include general exclusions for mental health conditions. Others might exclude pre-existing conditions, especially if you’ve had treatment within a certain timeframe before taking out the policy.
• Waiting periods, most policies have a waiting period. This means you won’t receive payments immediately after taking leave, you’ll need to be off work for the entire waiting period first.
• Benefit periods, depending on your policy, you might be entitled to income support for two years, five years, or until a certain age. Long-term claims for mental health can be reviewed more rigorously than physical ones.
• Partial disability claims, if you can return to work in a reduced capacity, say, part-time or in a different role, you may be eligible for partial benefits, depending on your policy’s structure.
• Medical evidence, mental health claims almost always require supporting evidence from specialists. Regular GP notes may not be enough.

3 Steps to Claiming Income Protection Insurance for Mental Health Conditions 

So how does one actually go about making a claim? 

1. First, before approaching your insurer, consider speaking to your GP or a mental health professional first. It’s mandatory to have an official diagnosis and clear recommendation that you’re unfit to safely perform your job duties. This documentation then becomes the foundation of your claim. 

 

2. Next, notify your insurance provider that you now intend to file a claim. They’ll provide you with a form that will outline what’s needed, typically including: 
• The initial GP report
• A certified copy of your identification 
• The policy schedule 
• All standard claim forms and other relevant documentation or reports.

 

3. Last but not least is the assessment and decision process. This can take some time as the insurance company will meticulously assess your claim based on the severity of your condition. IF approved, you’ll then begin receiving payments (after the waiting period ends) to help cover your income while you recover. 

Pro Tip: Keep detailed records, everything from appointment notes to communications with your insurer. It’ll make a huge difference if a dispute arises. 

Choosing the Right Policy

It’s definitely tempting to omit certain parts of your mental health history to secure lower premiums. But remember, this can backfire if and when you need to make a claim. A good insurance broker can help you find cover that doesn’t penalise you for being upfront. 

Get in touch today to find out how we can support you.