Rising interest in mental health insurance but coverage still inadequate, analysts say

SINGAPORE: Some insurers are seeing an uptick in demand for insurance policies with mental health coverage, but industry analysts say such options are still limited and the coverage usually inadequate.

The Institute of Mental Health said in its most recent study in 2018 that one in seven people in Singapore had experienced a mental disorder in their lifetime. The most common disorders here were major depressive disorder, alcohol abuse and obsessive-compulsive disorder.

Stressors over COVID-19, including the psychological impact of social distancing, have contributed to an overall decline in mental health, with the World Health Organization (WHO) warning in July of a “long-term and far-reaching” impact the pandemic has on mental health.

Last month, Minister for Social and Family Development Masagos Zulkifli said about 13 per cent of the population reported experiencing depression or anxiety symptoms between May 2020 and June 2021, during the one year since the pandemic started.

Amid rising awareness of mental health issues, more people are seeking out insurance plans that provide mental health coverage.

AIA, which launched the first insurance policy in Singapore to cover mental illness in January 2019, said the take-up rate for its Beyond Critical Care plan rose by more than 470 per cent in the first half of this year, compared with the same period in 2020.

Policyholders are insured for mental illnesses at 20 per cent of their basic plan's coverage. This means that a customer who holds a basic plan with coverage of S$250,000 will be eligible to claim S$50,000 for mental health conditions. This payout is capped at a lifetime limit of S$150,000.

However, AIA said it has not seen an increase in claims for the five mental illnesses covered by the plan – major depressive disorder, schizophrenia, bipolar disorder, obsessive-compulsive disorder and Tourette's syndrome.

Ms Tay Jin Li, AIA Singapore’s head of product management and proposition, said more people are aware that mental health issues are legitimate health conditions. 

She attributed this to a focus on mental wellness through media coverage, efforts by the public and private sectors to destigmatise the topic, and more people talking about it on online platforms.

“By taking the first step to provide coverage for mental health, we hope to encourage more members of our society to acknowledge these conditions as legitimate health conditions that require treatment and support.”

MATERNITY PROTECTION WITH MENTAL HEALTH COVERAGE

Two other insurers that CNA spoke to did not have policies with mental health coverage for the general population but offered such plans for expectant mothers.

Manulife’s ReadyMummy pays out 10 per cent of the sum insured for psychotherapy treatment when the mother is diagnosed with major depressive disorder or generalised anxiety disorder.

A spokesperson for the insurer said the take-up rate for the policy has increased since its launch in July 2019, with average monthly applications rising by 60 per cent last year.

Prudential Singapore also noted “steady demand” for its PRUMum policy since its launch in November 2019. 

The single-premium four-year term protection plan covers psychological consultations and pays out 5 per cent of the sum assured for a postpartum depression diagnosis.

Prudential said it also offers corporate customers the option to include coverage for clinical psychologists and psychiatric treatment in its customised plans under group insurance schemes.

These plans may include a counselling hotline and a health and wellness programme for employees with activities such as fitness, nutrition and mental wellness workshops, as well as health assessments and quizzes. 

Other insurers declined to share the take-up rate for their policies with mental health coverage, but said they offered a suite of such policies.

Great Eastern said it offers three plans that include mental health coverage. GREAT CareShield advantage gives customers an initial lump sum payout for mental health conditions that cause them to be unable to perform at least one activity of daily living, such as dressing and feeding.

The Pay Assure plan covers customers unable to work in their current job due to illness, which includes mental illness, or injury. The GREAT Family Care plan allows customers to add a rider for their parents to cover conditions such as severe dementia and Alzheimer’s disease without medical underwriting.

Income has two plans: The Lady 360 term-life plan and a mental benefit rider to its Star Secure life insurance plan.

The Lady 360 plan has an outpatient psychiatric benefit that offers a payout if the insured is diagnosed with major depressive disorder or anxiety disorder after a “traumatic life event”. The mental benefit rider gives a payout for diagnoses of major depressive disorder, schizophrenia, bipolar disorder and obsessive-compulsive disorder before 75 years of age and Tourette's syndrome before 21 years of age.

MENTAL HEALTH COVERAGE IS “INADEQUATE”

Although insurers have taken steps to introduce policies with mental health components, mental health insurance is still in the early stages, industry analysts told CNA.

“Options for mental health insurance in the market is currently limited and coverage is inadequate,” said EY Asean insurance sector leader Brandon Bruce.

“This is not unexpected as mental illness has not been something that has been well understood until the recent past. This naturally makes the underwriting process a little more challenging for insurers and has, to a certain extent, stunted the development of meaningful insurance products to cover these needs,” he added.

While some insurers offer health and wellness programmes for their customers, most of these focus on physical health and well-being, said Mr Paul Brenchley, partner and head of insurance advisory at KPMG in Singapore.

However, as the impact of mental health becomes more widely understood, insurers are starting to introduce support services, he added.

“But mental health insurance is still a space where the understanding and treatment of mental health issues is still evolving so it may take a while before a wider policy set is developed,” he said.

PwC’s health industries leader Dr Zubin J Daruwalla found that mental health coverage is primarily offered to larger companies on corporate plans – and are often still inadequate. 

Smaller firms usually do not have mental wellness or mental health coverage, he noted.

WHAT MORE CAN BE DONE?

Insurers should consider expanding policy coverage to include the cost of treatment for mental health conditions, such as post-diagnosis treatment and medicine, said Mr Bruce, although he acknowledged that this is “easier said than done”.

Mr Brenchley noted some challenges with promoting mental health policies.

“There continues to be a stigma attached to mental health issues despite the widespread acknowledgement of the negative impacts of stress and burnout.

“Given that the majority of insurance policies are still sold through banks or agents, this may be a difficult topic for intermediaries to raise and also for the clients to acknowledge to them issues they may have.” 

As such, more can be done to promote policies with mental health components through employee benefit schemes or direct digital sales channels, where customers can buy directly without “difficult face-to-face conversations”, he said.