Life Insurance: Avoid a Rude Surprise

Lots of people buy their first life insurance policy when they have their first child. Many new moms, however, pay higher rates than they expect -- for a reason they didn't anticipate.

As awareness of postpartum depression has grown in recent years, women who sought treatment and then applied for life insurance may have found themselves paying more than the "preferred," or lowest, rate. The difference in costs can spiral into the five figures over a 20-year term policy.

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Life insurance, in its simplest form, pays out upon death. Though insurance companies don't like saying so directly to a customer, most believe that women with postpartum depression are an elevated suicide risk. Thus, they charge them more, even though policies generally have a suicide clause that keeps the company from having to make good if a customer commits suicide up to 24 months after they sign up for service.

There is an easy way around all this: Shop for life insurance before you attempt to conceive, and get a policy where the premium is guaranteed to stay the same. That way, any lingering childbearing-induced health concerns besides depression -- say, high blood pressure, another occasional byproduct of pregnancy -- won't affect your rates.

This solution won't work for everyone. For one thing, many pregnancies are unplanned, and life-insurance companies may not sign you up during pregnancy -- especially toward the end.

What are the odds of experiencing postpartum depression? Between 6.5% and 12.9% of women experience minor or major depression at a particular point in time during the first year after having a baby, according to a 2005 survey published by the federal Agency for Healthcare Research and Quality, which looked at other existing research.

It is less clear how much of a suicide risk the large numbers of women with mild or moderate depression pose, especially those who have taken the initiative to seek treatment.

Companies like AIG, MassMutual and Prudential note that they consider a number of factors when evaluating risk for applicants with histories of postpartum depression. These include how recent, severe and long-lasting the condition was or is, and its effect on leading a normal life.

Every company is different, so shop around. State Farm, for instance, says it doesn't make women with postpartum depression pay more.

If you don't like a price, enlist your therapist's help in sending a written request for a better deal, especially if your treatment is complete. Include other context outside medical details, says Jack Dewald, president of Agency Services Inc. in Memphis, where he helps other life-insurance agents handle difficult cases. "They're looking for stable family situations, not a single mother with four kids and 18 stress points," he says.

One thing is for sure: It's a lousy idea to lie to your insurer about your medical history. If you die and your insurance company launches an inquiry and revokes the policy, it will be a shattering experience for your loved ones.

Better, then, to rid yourself of the possibility of encountering this nuisance in the first place. Try to plan your pregnancy, and plan to get your life insurance ahead of time so that postpartum depression plays no role in the price you pay.