Insurance for Mental Health in NZ: What Is and Is Not Covered
In the year to June 2025, 14.3% of New Zealand adults, approximately 619,000 people, experienced high or very high psychological distress. Among young adults aged 15 to 24, the figure was 22.9%. For Maori adults it was 22.5%, and for Pacific adults 23.8%.
These are not abstract statistics. They translate directly into workplace absences, ACC claims, hospital admissions, and insurance claims. Mental health conditions now account for approximately 32% of all income protection claims in New Zealand, making them the single largest claim category, ahead of musculoskeletal conditions and cancer.
Yet mental health remains one of the most misunderstood areas of insurance. Many New Zealanders assume they cannot get cover if they have ever experienced anxiety or depression. Others assume their policy covers everything. Both assumptions are wrong.
This guide provides a clear, evidence-based explanation of how New Zealand insurers treat mental health conditions across income protection, trauma, health insurance, and life insurance.
The Scale of Mental Health in New Zealand
In the year to June 2025, 14.3% of New Zealand adults, approximately 619,000 people, experienced high or very high psychological distress, rising to 22.9% among those aged 15 to 24, 22.5% for Maori adults and 23.8% for Pacific adults. New Zealand's suicide rate of 13 per 100,000 sits above the OECD average of 11.
| Indicator | Figure | Source Period |
|---|---|---|
| Adults with high/very high psychological distress | 14.3% (~619,000) | 2024/25 |
| Youth (15 to 24) with high/very high distress | 22.9% | 2024/25 |
| Maori adults with high/very high distress | 22.5% (~147,000) | 2024/25 |
| Pacific adults with high/very high distress | 23.8% (~69,000) | 2024/25 |
| Income protection claims attributed to mental health | ~32% | Industry data |
| NZ suicide rate (per 100,000) | 13 | Recent OECD data |
| OECD average suicide rate (per 100,000) | 11 | Recent OECD data |
The gap between need and access is significant. In 2024/25, 14.3% of New Zealand adults, about one in seven, reported high or very high levels of psychological distress, up from 13.1% in 2023/24 and 7.4% in 2019/20 (Ministry of Health, New Zealand Health Survey, Annual Update of Key Results 2024/25, retrieved 18 August 2026). Public mental health services are under sustained pressure, with 2025/26 government targets aiming for 80% of people to access primary mental health services within one week and specialist services within three weeks.
This environment makes private insurance coverage for mental health both more relevant and more complex than it has ever been.
How Each Insurance Type Treats Mental Health
New Zealand insurers treat mental health differently across product types. Income protection is the most relevant, covering depression, anxiety, PTSD and burnout that meet the policy definition of disability, and mental health accounts for approximately 32% of income protection claims. Health insurance covers psychiatric and psychology consultations with limits, trauma insurance rarely covers pure psychiatric conditions, and life insurance is affected mainly at underwriting.
Income Protection Insurance
Income protection is the insurance product most directly relevant to mental health. It pays 75% to 85% of your pre-disability income if you are unable to work due to illness or injury. Mental health conditions, particularly depression, anxiety, and stress-related disorders, are the most common reason New Zealanders claim on income protection.
What is covered:
- Depression that prevents you from working
- Anxiety disorders severe enough to cause work incapacity
- Post-traumatic stress disorder (PTSD)
- Burnout and stress-related conditions that meet the policy definition of disability
- Bipolar disorder, where it prevents the insured from performing their occupation
What is typically excluded or restricted:
- Self-inflicted injuries
- Conditions arising from criminal activity
- Substance abuse (may be excluded or have specific provisions)
- Pre-existing mental health conditions (may be excluded or subject to stand-down periods)
- Conditions where the insured cannot demonstrate inability to perform their occupation
The claims picture: Mental health represents approximately 32% of income protection claims across the New Zealand market. This is not a niche concern. It is the primary reason the product exists in practice. Insurers are well accustomed to assessing and paying mental health claims, provided the claimant meets the policy definition of disability and has disclosed their medical history honestly at application.
Health Insurance (Private Medical)
Private health insurance in New Zealand covers a range of mental health treatments, though the extent varies significantly between insurers and plan levels.
What is generally covered:
- Psychiatric consultations (specialist referral)
- Psychologist and counsellor sessions (often with annual limits)
- Inpatient psychiatric treatment (hospital-level plans)
- Prescription medication for mental health conditions (including non-Pharmac drugs)
- Telehealth mental health consultations (some providers)
What is commonly excluded or limited:
- Pre-existing mental health conditions (exclusion or loading)
- Annual session limits for psychology/counselling (e.g., UniMed offers up to $1,000 per year for psychiatrist, psychologist, or counsellor sessions)
- Stand-down periods of 6 to 24 months for specified conditions
- Substance abuse treatment (separate exclusion in many policies)
Trauma (Critical Illness) Insurance
Trauma insurance pays a lump sum upon diagnosis of a specified serious condition. Mental health coverage under trauma insurance is limited.
What may be covered:
- Severe PTSD arising from a physical trauma event (e.g., serious accident)
- Some policies include specific psychiatric conditions if they meet strict diagnostic criteria
What is generally not covered:
- Depression (regardless of severity)
- Generalised anxiety disorder
- Burnout or stress-related conditions
- Conditions without a physical trauma trigger
- Pre-existing psychiatric diagnoses
Trauma insurance is designed around defined medical events such as cancer, heart attack, and stroke. Pure psychiatric conditions, however debilitating, are rarely covered under trauma policies. Income protection is the more appropriate product for mental health-related inability to work.
Life Insurance
Life insurance pays a benefit upon death or terminal illness diagnosis. Mental health conditions do not directly trigger life insurance claims. However, mental health history affects underwriting.
Underwriting implications:
- A history of depression or anxiety may result in standard terms, a mental health exclusion, a premium loading, or postponement depending on severity, treatment, and recency.
- Current active treatment or hospitalisation for mental health conditions will likely result in postponement until the condition stabilises.
- Suicidal ideation or previous attempts will significantly affect underwriting, potentially resulting in exclusion or decline.
- Most NZ life insurance policies include a suicide exclusion for the first 13 months of the policy.
Pre-Existing Conditions: What You Need to Know
A pre-existing mental health condition does not rule out insurance in New Zealand, but it does shape the terms. After you disclose, an insurer may offer standard terms, a mental health exclusion, a premium loading, postponement for 6 to 24 months, or a decline, depending on severity, treatment and recency. The Contracts of Insurance Act 2024 requires fair representations.
How disclosure works
When you apply for any insurance product in New Zealand, you are required to answer health questions honestly and completely. For mental health, these questions typically cover:
- Have you ever been diagnosed with or treated for depression, anxiety, or any other mental health condition?
- Have you ever taken medication for a mental health condition?
- Have you ever been referred to or seen a psychiatrist, psychologist, or counsellor?
- Have you ever been hospitalised for a mental health condition?
- Have you ever had time off work due to a mental health condition?
You must answer these questions truthfully. The Contracts of Insurance Act 2024 requires consumers to make fair representations. Non-disclosure of a known mental health condition can void your policy entirely, leaving you with no cover when you need it most.
Possible underwriting outcomes
Based on your disclosure, the insurer will assess your application and may offer one of several outcomes:
| Underwriting Decision | What It Means | When It Typically Applies |
|---|---|---|
| Standard terms | Full cover, normal premium | Mild, historical condition with no recent treatment (e.g., single episode of mild depression over 5 years ago) |
| Exclusion clause | Cover granted, but claims related to mental health are excluded | Moderate history, recent treatment, or ongoing medication |
| Premium loading | Full cover including mental health, but at a higher premium | Moderate risk profile, stable condition with ongoing management |
| Postponement | Application deferred for 6 to 24 months | Active treatment, recent episode, condition not yet stabilised |
| Decline | Application refused | Severe, recent, or unstable mental health conditions, multiple hospitalisations |
Stand-down periods
Some insurers apply stand-down periods for mental health, meaning the policy will not cover mental health claims for a specified period (typically 6 to 24 months) after the policy starts. After the stand-down period, mental health claims are assessed on the same basis as any other claim.
Stand-down periods are distinct from exclusion clauses. An exclusion permanently removes mental health from the policy. A stand-down is temporary.
How Major NZ Insurers Approach Mental Health
Major New Zealand insurers take materially different positions on mental health. Southern Cross and Accuro cover it under health plans but do not offer income protection, UniMed funds up to $1,000 a year of psychiatrist, psychologist or counsellor sessions, and AIA, Partners Life, Asteron Life, nib and Cigna all cover mental health under income protection subject to underwriting.
| Insurer | Health Insurance Mental Health | Income Protection Mental Health | Notable Features |
|---|---|---|---|
| Southern Cross | Covered under hospital and specialist plans. Telehealth options available. | N/A (does not offer income protection) | Reversed ADHD/autism classification in 2026, now treating them as neurodevelopmental rather than mental health conditions |
| nib | Mental health add-on available on selected plans | Covered, subject to underwriting | New dedicated mental health module introduced |
| UniMed | Up to $1,000/year for psychiatrist, psychologist, or counsellor. No referral required. | N/A | Strong primary care and counselling coverage. Budget-friendly option. |
| AIA | Covered under comprehensive plans | Covered, subject to underwriting. Claims data confirms mental health as a leading category. | Vitality wellness programme may support proactive mental health management |
| Partners Life | N/A (does not offer standalone health insurance) | Covered, subject to underwriting. Published claims breakdown available. | Transparent claims reporting. Customer Outcomes Review Committee for disputed claims. |
| Asteron Life | N/A | Covered, subject to underwriting. Asteron Life published a 97% claims payout rate across Life, Trauma and Income Protection claims received 1 July 2023 – 30 June 2024. | Among the higher published claims payout rates in the NZ market |
| Accuro | Covered. Supports complex health histories. | N/A | Known for accommodating applicants with pre-existing conditions |
| Cigna | Covered under comprehensive plans. Waiting periods may apply. | Covered, subject to underwriting. | Guaranteed acceptance plans available (higher premiums, limited cover) |
Important note: The table above reflects general positions. Every application is assessed individually. An insurer that declines one applicant with a mental health history may accept another with a different profile. Working with a licensed financial adviser who can present your application to the most appropriate insurer is the most effective strategy.
Getting Cover with an Existing Mental Health Condition
New Zealanders with a current or past mental health condition improve their chances of meaningful cover by requesting their GP notes before applying, disclosing everything, working with a licensed financial adviser who knows each insurer's appetite, and applying during a stable period. Under the Contracts of Insurance Act 2024 an insurer can avoid a policy within the first three years for material non-disclosure.
Gather your medical records before applying. Know exactly what is on your GP's file. Request a copy of your medical notes so you can accurately answer application questions. Surprises during underwriting, where an insurer discovers undisclosed history through a GP report, are the most common reason for adverse outcomes.
Work with a licensed financial adviser. An adviser who understands mental health underwriting can present your application to the insurer most likely to offer reasonable terms. Different insurers have different appetites for mental health risk. A decline from one insurer does not mean every insurer will decline.
Be completely honest. Disclose everything. A policy obtained through non-disclosure is worse than no policy at all, because it creates a false sense of security. Under the Contracts of Insurance Act 2024, insurers can avoid a policy within the first three years if material information was not disclosed. After three years, protections increase, but fraud remains grounds for avoidance.
Apply when your condition is stable. If you are in the middle of a medication change, a new diagnosis, or active crisis treatment, consider waiting until your condition has stabilised. Applying during a stable period improves your chances of standard or near-standard terms.
Consider cover with exclusions rather than no cover at all. A life insurance policy that excludes mental health still covers you for cancer, heart disease, accidents, and every other cause of death. An income protection policy with a mental health exclusion still pays if you cannot work due to a back injury, stroke, or any non-excluded condition. Partial cover is almost always better than no cover.
Review your cover regularly. If you were given an exclusion or loading three years ago because of a recent depressive episode, and you have since been stable and off medication, ask your adviser to request a review. Some insurers will remove or reduce exclusions over time as your risk profile improves.
ACC and Mental Health: Where the Gaps Are
ACC covers mental injuries that arise from a physical accident, such as PTSD following a serious car accident or workplace injury, but it does not cover mental health conditions without a physical trigger. Depression, anxiety, burnout from workplace stress and PTSD from workplace bullying fall outside ACC in New Zealand, leaving income protection or personal savings as the only income replacement.
This means:
- Depression unrelated to an accident: not covered by ACC
- Anxiety unrelated to an accident: not covered by ACC
- Burnout from workplace stress: not covered by ACC
- PTSD from a physical accident: covered by ACC
- PTSD from non-physical trauma (e.g., workplace bullying): generally not covered by ACC
The ACC gap for non-accident mental health conditions is one of the strongest arguments for income protection insurance. If you develop depression that prevents you from working for six months, ACC will not replace your income. Only income protection insurance or personal savings can fill that gap.
The Cost of Not Being Covered
A 35-year-old New Zealander earning $85,000 who cannot work for eight months with severe depression loses about $56,667 in income, and ACC pays nothing because the condition is not accident-related. With income protection, roughly $42,500 is replaced after a four-week waiting period, cutting the net shortfall from around $53,398 to the waiting period gap alone.
| Financial Impact | Without Income Protection | With Income Protection |
|---|---|---|
| Lost income (8 months) | $56,667 | $0 (after waiting period) |
| Income replacement from insurance | $0 | ~$42,500 (75% of income, after 4-week waiting period) |
| ACC entitlement (non-accident illness) | $0 | $0 |
| Sick leave (typical 10 days) | ~$3,269 | ~$3,269 |
| Net financial shortfall | ~$53,398 | ~$3,269 (waiting period gap only) |
| Impact on mortgage, debt, and savings | Severe | Minimal |
The annual premium for income protection insurance for a 35-year-old earning $85,000 with a four-week waiting period and benefit period to age 65 is driven mainly by occupation class and insurer. A desk-based worker sits at the lower end of the market, whilst a manual occupation costs materially more for the same cover. Either way, the premium is a small fraction of the financial shortfall of over $50,000 that a single mental health episode can create.
Frequently Asked Questions
Will having therapy on my medical records prevent me from getting insurance?
Not necessarily. Many New Zealanders have sought counselling or therapy at some point. Insurers differentiate between a single course of therapy for a specific life event (such as grief or relationship breakdown) and a chronic, recurring mental health condition. A single episode of counselling five years ago with no ongoing issues is unlikely to result in anything more than standard terms. Recent, ongoing, or severe conditions may lead to exclusions, loadings, or postponement.
Can I get income protection if I am currently taking antidepressants?
Yes, in many cases. Current antidepressant use does not automatically result in a decline. The insurer will consider the type of medication, dosage, duration, underlying diagnosis, and how well controlled the condition is. Some insurers will offer cover with a mental health exclusion. Others may offer standard terms if the condition has been stable on medication for an extended period. A licensed financial adviser can advise on which insurer is most likely to offer favourable terms.
Does income protection cover burnout?
It depends on the policy definition of disability. Most income protection policies cover you if you are unable to perform the material duties of your own occupation due to illness. If a medical professional certifies that burnout has progressed to a diagnosable condition (such as major depressive disorder or generalised anxiety disorder) that prevents you from working, the claim may be valid. Burnout as a self-reported state of exhaustion without a clinical diagnosis is unlikely to meet the threshold.
Is ADHD considered a mental health condition by insurers?
This has been a contentious area. Southern Cross initially classified ADHD and autism as mental health conditions and excluded them from certain plans. In 2026, Southern Cross reversed this position and now treats them as neurodevelopmental conditions rather than mental health conditions. Other insurers vary in their classification. If you have ADHD, disclose it on your application and discuss the likely underwriting approach with your adviser before applying.
Can I increase my cover after being diagnosed with a mental health condition?
This is difficult. Increasing cover on an existing policy typically requires fresh underwriting for the additional amount. If you have been diagnosed with a mental health condition since the policy started, the additional cover may be subject to a mental health exclusion even if your original cover does not have one. This is why it is advantageous to secure adequate cover while you are in good health.
What if my insurer denies a mental health claim?
You have the right to dispute a declined claim. Start by requesting a detailed explanation of the decline in writing. If you believe the decision is incorrect, escalate through the insurer's internal complaints process. If that does not resolve the matter, you can lodge a complaint with the Insurance and Financial Services Ombudsman (IFSO), which provides free, independent dispute resolution. Some insurers, such as Partners Life, also have independent review committees for declined claims.
Are mental health claims harder to prove than physical health claims?
Insurers apply the same evidential standard. You need medical certification from a registered practitioner confirming that your condition meets the policy definition of disability. In practice, mental health claims may require more detailed clinical evidence (psychiatric assessments, treatment records, functional capacity evaluations) because the condition is not visible on a scan or blood test. Working with your treating clinician to provide thorough documentation strengthens your claim.
References
- Ministry of Health NZ, Health system overview
- Financial Markets Authority (FMA), Insurance guidance
- Sorted.org.nz, Health insurance
- Insurance & Financial Services Ombudsman (IFSO)
- MoneyHub NZ, Health insurance
- Cancer Society of New Zealand
- Heart Foundation NZ
- Mental Health Foundation NZ
- New Zealand Health Survey 2024/25, Health New Zealand | Te Whatu Ora. Psychological distress and mental health prevalence data.
- Financial Services Council of New Zealand, income protection claims data.
- OECD Mental Health Performance Benchmarks, suicide rates and comparative data.
- Southern Cross Health Insurance, policy updates and neurodevelopmental condition classification changes 2026.
- Contracts of Insurance Act 2024, New Zealand Legislation.
- Insurance and Financial Services Ombudsman (IFSO) Scheme, dispute resolution information.
Disclaimer: This article is general information only and does not constitute personalised financial or medical advice. Insurance needs vary based on individual circumstances, including mental health history. QuoteHub connects you with licensed financial advisers (FSP712931) who can provide advice tailored to your situation. If you are experiencing a mental health crisis, contact 1737 (free call or text) for immediate support.
Read the full insurance guides
Compare your cover with a licensed NZ adviser · free, no obligation.
Explore related pages: Life Insurance, Income Protection, Health Insurance, Trauma Insurance, Referral.