Denied life insurance application over anxiety disorder sparks concern

by Leo Almazora21 Aug 2019

A man with generalized anxiety disorder, whose life insurance application was denied, is raising concerns that his case reflects a practice that could dissuade others from seeking help from mental illness.

The Ontario resident, Robert Pugh, and his wife decided to each purchase a term-based life insurance policy this past spring, reported CBC News. With a toddler child and another baby on the way, the two wanted to ensure that should one of them pass away, the other would not struggle with mortgage payments.

Pugh told CBC News that they each applied for a Sun Life insurance plan with a 10-year term. The process for both involved a paramedical exam — an interview to look at one’s medical history — and a phone interview. Pugh disclosed that since he was in his late 20s, he has been receiving treatment for his anxiety disorder; he is now taking the medication Pristiq as well as CBD oil under the supervision of his doctor.

While Pugh’s wife was approved, Sun Life denied his application. A letter he received in July explained that he was rejected “based on [Sun Life's] assessment that includes information about your personal health.” He said he called Sun Life to get more details; he learned that the rejection was because of his mental health condition, and was told he could apply again in six months.

While they declined to comment specifically on Pugh’s case, a spokesperson for the company said in a statement that they recognize anxiety as one of the most common mental health conditions and that it varies in severity, but applicants could be denied coverage on a case-to-case basis.

“In most cases, we approve applications from clients with generalized or mild anxiety. There are instances where a client may encounter higher premiums or not be eligible for coverage,” the statement emailed to CBC News said. It added that clients are welcome to ask for their applications to be reviewed or to apply for products with less stringent requirements on health information.

“The private insurance sector has become very, very competitive and very profit-driven," Vicki Zhang, who works within the Department of Statistical Sciences at the University of Toronto, told CBC News. “From their bottom-line perspective, it makes sense for them not to cover someone with mental illness ... especially a known condition.”

The Ontario Human Rights Code provides that “services and contracts cannot generally make distinctions based on disability.” But in an emailed statement, the Ontario Human Rights Commission said there is an exception that allows insurers to make a “distinction, exclusion or preference on reasonable and bona fide grounds.”

Courtney Mulqueen, a Toronto-based disability insurance law practitioner, told CBC News that for the exception to apply, insurers must prove that a condition carries a substantial increase in risk. In the case of generalized anxiety disorder, she said “there’s a very good argument that that does not substantially increase the risk.”

Mulqueen expressed concern that using mental illness to deny insurance coverage could discourage people from seeking help, or that applicants would decide not to disclose their illnesses, leading to serious legal implications.