Life Insurance and Mental Health: What’s Changing and What You Need to Know

For years, people with a history of anxiety, depression, or other mental health conditions have faced extra hurdles when applying for life insurance. Applications dragged on for weeks, underwriters asked for endless details, and in some cases coverage was denied or offered at much higher rates.

But change is finally happening—and faster than most people realize.

Faster, Fairer Underwriting with AI

In Australia, Zurich Insurance recently partnered with the University of Technology Sydney to tackle one of the biggest challenges in life insurance underwriting: how to fairly evaluate applicants with mental health histories.

Normally, an application flagged for mental health could sit in underwriting for three weeks or longer. With their new AI-powered tool Rapido, that wait time has been cut down to less than a day—with human underwriters still reviewing final decisions.

This is more than just a speed upgrade. Quicker, smarter underwriting means fewer assumptions based on outdated stigma and more applicants getting approved on their own merits. For families who’ve put off applying because of past experiences, this shift could open the door to protection they thought wasn’t possible.

What About the U.S.?

The U.S. hasn’t rolled out a mental-health-focused underwriting tool like Australia’s yet. But the groundwork is being laid:

• Now (2025): AI is already being used by U.S. life insurers to speed up underwriting. Some companies are cutting processing time from days to just minutes for standard applications. Regulators in 24 states have already adopted AI oversight rules to ensure fairness.

• Next 2 Years: Generative AI and “Agentic AI” are being piloted. These tools can adapt in real time and could reshape how complex cases, including mental health, are underwritten.

• Looking Ahead (2027+): With the infrastructure forming and regulation catching up, we may see mental health–specific AI underwriting tools arrive in the U.S. market—making the process faster and more balanced.

In short: the U.S. is on its way. The transformation has already begun, and mental health fairness is likely to be part of the next wave.

Real-Life Examples: How Mental Health Affects Ratings

A common myth is that any history of mental illness automatically means a decline. The reality is much more nuanced. For a 40-year-old female, nonsmoker, underwriting could look like this:

• Depression & Anxiety (well-managed): Can still qualify for a Preferred health rating—one of the best classes available.

• PTSD: Often approved at a Standard rating, which is the baseline coverage most applicants receive.

• Bipolar Disorder: More complex, but still insurable, often at a Table rating (an extra premium tier).

The key: approval is not off the table. Stability of treatment, medical follow-up, and a clear history matter more than the diagnosis alone.

Myth vs. Reality: Life Insurance and Mental Health

• Myth: Any history of depression or anxiety means automatic denial.
  Reality: Many applicants with well-managed conditions still qualify for Preferred rates.

• Myth: Medications for mental health always hurt your chances.
  Reality: Stable use of medication can actually be a positive sign—it shows symptoms are under control.

• Myth: PTSD or bipolar disorder make you uninsurable.
  Reality: Coverage is still possible. PTSD may be issued at Standard rates, while bipolar disorder can qualify with a Table rating.

• Myth: A decline means you can never try again.
  Reality: Declines aren’t permanent. Sometimes it’s about timing—life and health change over the years. And sometimes, it comes down to having a knowledgeable agent. The wrong guidance can sabotage an application, while the right strategy can open the door to approval later.

How ToraWealth Helps You Apply Safely

One of the biggest concerns clients share with us is: “What if I apply and get declined? Will that follow me forever?”

Here’s the good news: at ToraWealth, we can submit unofficial applications—sometimes called “informal inquiries”—so nothing stays on your permanent insurance record. This gives us the flexibility to:

• Review your complete 5-year medical history upfront

• Shop multiple carriers on your behalf

• Find the best rate and option without leaving a trail of declines

That way, when you’re ready for a formal application, you already know which carrier is most likely to approve you—and at what rating.

Final Takeaway

Mental health and life insurance don’t have to be at odds. From depression to PTSD to bipolar disorder, there are paths to approval—even if the rating class varies. With smarter underwriting, new technology, and the ability to test the waters safely through unofficial applications, you can secure the coverage you need without fear of getting stuck with the wrong record.

And remember—a decline is not forever. Health changes, underwriting standards evolve, and with the right advisor guiding the process, second chances are very real.

At ToraWealth, our job is simple: protect your privacy, shop the market for you, and guide you toward the best coverage possible.

A Real-World Example

One of our clients was declined for coverage in her early 30s because of depression. At the time, she didn’t have the right agent to guide her, and her application went straight to a carrier that wasn’t flexible. Fast forward five years: her treatment was stable, she was under regular care, and we approached the right insurer through an unofficial application first. The result? She was approved at a Standard rating, giving her family the protection she thought she’d never qualify for.

Stories like this are why we remind clients: don’t let one “no” stop you. With time, the right preparation, and the right partner, the answer can become “yes.”