One in five Australians aged 16-85 experience a mental illness in any year.* As the awareness of mental health conditions increases, so do the claims for life insurance. Mental health is fast becoming one of the highest claimed conditions for Income Protection and Total & Permanent Disablement. As a result of this, insurance companies are looking to put exclusions or loadings (additional premiums) on life policies for clients who have a history of this condition.

Some of my clients have expressed their concerns about mental health exclusions saying they’re a doubled edged sword. Clients feel as they’re being punished for seeking treatment from their GP but weren’t aware of the impact it would have on obtaining life insurance in the future. Keep in mind that not all mental health disclosures will be treated the same.

Case Study 1: Jess sought treatment from a psychologist when her father died. She attended six sessions as per her mental health treatment plan provided by her GP. She is now applying for cover 5 years later.

Outcome: The likelihood of Jess obtaining a mental health exclusion is slim as this would be considered a ‘life event’ and she has not received further treatment for any other mental illness conditions.

Case Study 2: Daniel experienced some anxiety at age 19 when he was attending university. Daniel spoke to his GP and was referred to a mental health treatment plan however he did not attend these sessions. At age 31 Daniel spoke to his GP again about suffering depression after receiving a redundancy at work and was again referred to a mental health treatment plan and this time he attended his sessions. Daniel is now 33 and is applying for cover.

Outcome: Due to Daniel’s history of mental illness (anxiety and depression) and given the short period since his last episode, it is likely the insurance company would apply a mental health exclusion. There may be room to renegotiate these terms in 3-5 years if Daniel’s mental health continues to stay well, however, this would be at the discretion of the insurance company.

To some, this may seem unfair but insurance companies are aware that over 50% of people diagnosed with depression may relapse into a depressive state and it is most likely to return within three years of the first episode.^

If you’ve suffered from mental health problems in the past and are looking to obtain life insurance, you should keep in mind the following:

• Make sure you disclose all mental health issues. You have a legal obligation when applying for cover to disclose all health conditions, you would be in a far worse position if you don’t disclose this condition.
• Know exactly what you’re covered for. If the insurance company decides to put a loading or exclusion on the policy, make sure you have a good understanding of what this means.

Above all, speak with your adviser. Advisers have the advantage of having a relationship with the insurance company’s and can, therefore, assist you in receiving the most favourable terms.

If you or anyone you know is suffering from any mental health issues, please speak to your GP or contact Lifeline on 13 11 14 or Beyond Blue on 1300 22 4636.

Please note that this article provides general advice, and has not taken into consideration your personal or financial circumstances. If you would like more tailored advice regarding life insurance or any of our financial services, please contact us today. One of our advisers would be delighted to assist you.

You’ve no doubt heard the news that 3 of the ‘big 4’ banks have increased their variable home loan rates.  Westpac was the first to increase their rates, despite the RBA keeping rates on hold at 1.5% since August 2016.  Westpac announced on 30^th August that their variable home loan rates will increase by 0.14% effective 19^th September due to the increase of costs to source funding on the wholesale markets.

The major banks have been making the usual noises about absorbing these higher funding costs in the hope that they would ease over time, and the need to pass on these costs to customers.

ANZ and Commonwealth Bank followed suit on 6^th September by announcing that their variable home loan rates will also increase.  ANZ will increase its variable home loan interest rates by 0.16% effective 27^th September in both owner occupier and investment mortgages.  However, ANZ will exclude customers in drought declared areas of regional Australia.  CBA will increase its rates by 0.15% from 4^th October.

The headline rates for Westpac, ANZ, and CBA are as follows:

WBC

Standard variable Owner occupier Principal and Interest rate to increase to 5.38% p.a.

Standard variable Owner occupier Interest only rate to increase to 5.97% p.a.

Standard variable Residential Investment Principal & Interest rate to increase to 5.93% p.a.

Standard variable Residential Investment Interest only rate to increase to 6.44% p.a.

ANZ

Standard variable Owner occupier Principal and Interest rate to increase to 5.36% p.a.

Standard variable Owner occupier Interest only rate to increase to 5.91% p.a.

Standard variable Residential Investment Principal & Interest rate to increase to 5.96% p.a.

Standard variable Residential Investment Interest only rate to increase to 6.42% p.a.

CBA

Standard variable Owner occupier Principal and Interest rate to increase to 5.37% p.a.

Standard variable Owner occupier Interest only rate to increase to 5.92% p.a.

Standard variable Residential Investment Principal & Interest rate to increase to 5.95% p.a.

Standard variable Residential Investment Interest only rate to increase to 6.39% p.a.

NAB is yet to increase their rates, but many industry experts suggest that it is only a matter of time.

If you, or your friends or family have a home loan via one of the major banks, it would be well and truly worth the time spent to review your arrangements to ensure that the loan offers a competitive rate with low fees.

Banks traditionally rely on “inertia” in the event of raising home loan rates.  It is estimated that approximately 80% of home loan customers won’t do anything and will continue to pay the higher repayments.  This is simply a ‘Lazy Tax.’  For example, the ANZ rate increases will add about $40 a month to a $400,000 home loan.

Just to provide an indication of the rates available via some of our lenders, here are some comparisons for you to consider:

Standard variable Owner occupier Principal and Interest rate 3.68% p.a.

Standard variable Owner occupier Interest only rate 3.99% p.a.

Standard variable Residential Investment Principal & Interest rate 3.97% p.a.

Standard variable Residential Investment Interest only rate 4.29% p.a.

These reduced rates could save you THOUSANDS of dollars over the life of your home loan.

Please contact us today for a confidential, cost and obligation free discussion about your home loan.  We would also be happy for you to refer your family or friends so we can also assist them to locate a cost-effective home loan which suits their needs.

Please note that this article provides general advice, it has not taken into consideration your personal or financial circumstances. If you would like more tailored advice relating to mortgage broking or other financial services, please contact us today.