Helping clients navigate the tricky terrain of mental health claims

Helping clients navigate the tricky terrain of mental health claims

Many insurance claims begin with a defining event. A diagnosis. A surgery. An accident. From there, there’s often a predictable path to recovery – a roadmap clients can follow with some certainty. Mental health claims often unfold very differently.

Conditions tend to develop gradually, sometimes over months or years, before a formal diagnosis is made. There’s rarely a single moment when a client moves from “well” to “unwell.” The terrain is often ambiguous, and each client’s journey is deeply individual.

Mental health has become one of the most discussed topics in life insurance – and for good reason. Billions of dollars are paid annually in mental health-related claims^[1] linked to psychological conditions, and the industry continues to see their growing role in protection portfolios.

Yet “mental health” encompasses a broad spectrum, from mood disorders and trauma-related conditions to behavioural disorders and neurodevelopmental conditions with complex comorbidities. Understanding this range provides valuable context for the experiences clients may face during a claim.

The winding road of mental health claims

If physical injury claims are like straight highways leading from diagnosis to recovery, mental health claims may resemble a winding mountain road.

Progress can be slow, unpredictable, and occasionally backtracking. Capacity can fluctuate week to week, and sometimes day to day. A client may show improvement for a period, then experience setbacks as treatment evolves or circumstances change.

Unlike a broken bone, psychological conditions cannot be seen on an X-ray or confirmed with a scan. Recovery is often assessed through a more nuanced lens: how someone manages the everyday demands of work and life.

This difference also influences claim duration.

Data from Safe Work Australia shows psychological injury claims generally involve longer periods away from work than many physical injuries. Reviews may happen in stages, with each new piece of evidence shaping the journey. Appreciating this rhythm helps explain why timelines aren’t linear and why each client’s journey can look very different.

For advisers, recognising this rhythm helps set realistic expectations for clients. Acknowledging that progress often comes in small, unexpected steps allows advisers to guide conversations empathetically, reassuring clients throughout the claims process.

How mental health claims are assessed

When assessing a mental health claim, the diagnosis is only one part of the story.

What insurers are really trying to understand is functional impact – how a client’s condition affects their ability to perform the specific duties of their role.

Think of it as the difference between knowing the weather forecast and seeing how it actually changes the commute. Diagnosis explains the condition; functional capacity explains what it means in practice.

Medical reports play a central role here. The level of detail can strongly influence how clearly a claim is assessed.

A note that a client is “not coping well” can be difficult to interpret. A report describing challenges with concentration, decision making, workload management, or client interaction provides a much clearer view of functional capacity.

Reports that link symptoms to specific tasks – handling a heavy workload, making high-stakes decisions, or engaging with clients – provide a far stronger basis for assessment than broad descriptions of distress. Insurers may also consider workplace adjustments or rehabilitation notes to build a fuller picture. The richer the detail, the easier it is for advisers to anticipate how a claim might evolve.

This is particularly important because mental health conditions often fluctuate.

Some clients respond quickly to treatment and support. Others experience periods of improvement followed by setbacks. Assessments are often conducted at multiple points in time to capture how capacity evolves.

For advisers, understanding this approach helps explain why timelines differ, and why patience is essential in supporting clients through mental health claims.

Why occupation matters more than many realise

One of the most interesting aspects of mental health claims is how strongly occupation shapes the claims journey.

Two clients can share the same diagnosis yet experience very different impacts depending on the nature of their work.

A portfolio manager making continuous investment decisions may face very different functional challenges compared with someone in a role with more structured or routine tasks.

Roles that involve sustained concentration, complex decision making, frequent client interaction, or long hours can place unique pressures on someone experiencing psychological strain.

That is why insurers assess not only the condition itself but also how it affects the duties of a client’s role.

For advisers, this perspective helps frame discussions with clients about what a claim might involve and which aspects of work may need support.

Questions such as:

• Which parts of your role currently feel most difficult to perform?
• Are there tasks that feel manageable and others that feel overwhelming?
• Has your doctor discussed what returning to work might look like for you?

help build a clearer understanding of how the condition affects day-to-day occupational demands and how advisers can support clients through the claim alongside the insurer.

Helping clients approach claims with confidence

For many clients, the claims process can feel unfamiliar and daunting. This is particularly true when mental health is involved, as the condition itself may already be affecting focus, confidence, or decision making.

In these moments, advisers play an important role in providing perspective.

Not by giving medical advice or directing the claims process, but by helping clients understand how claims are assessed and what the journey might involve.

When advisers understand the role of functional capacity, occupational demands, and the non-linear nature of recovery, they can frame conversations in ways that feel both informed and empathetic.

Even before a claim arises, this knowledge is valuable.

Mental health claims will likely continue to be an important part of the protection landscape. They are complex. Highly individual. And rarely predictable.

But when advisers understand how these claims are assessed, they are better positioned to guide conversations with clients early, helping them feel prepared, and reducing uncertainty.

Those early discussions can demystify the process, reduce uncertainty, and give clients a clearer sense of what to expect.

In many cases, that understanding alone can make the claims journey feel far less overwhelming.

And ultimately, that is what good advice aims to do: help clients navigate life’s uncertainties with greater confidence when it matters most.

By Marcello Bertasso, Head of Underwriting & Claims Management, PPS Mutual