TAL Research Highlights Impact of Mental Health on Life Insurance Costs

The survey found that 37% of Australians cancel social plans primarily due to tiredness, with the percentage increasing to 45% among women, compared to 28% for men. Over 70% of respondents indicated they make time for activities that enhance their mental wellbeing, with being close to home identified as the key factor for sticking to plans by 54% of those surveyed.

According to Glenn Baird, head of mental health at TAL, these findings emphasize the importance of social connections for mental health. He stated that while Australians value their relationships, they often feel constrained by time and resources. However, the majority are engaging in activities that support their wellbeing, suggesting an opportunity to integrate social connections into self-care practices.

The research is set against the backdrop of rising costs due to mental health claims. According to the Council of Australian Life Insurers (CALI), mental health has become the leading cause of total and permanent disability (TPD) claims, making up nearly a third of all claims paid. In 2024, insurers disbursed over $2.2 billion in retail mental health claims, nearly double the amount from five years prior. Moreover, mental health issues contributed to one in five income protection claims, resulting in payouts of $887 million.

These financial pressures are reflected in the increased insurance premiums for members. AustralianSuper announced significant premium hikes effective May 30, 2026, including a 40% increase in TPD cover, 20% for death cover, and up to 38% for income protection, citing a rise in mental health and disability claims among younger members.

Insurers are revising their products to adapt. TAL introduced its TPD Support Option in December 2025, which allows for annual payments of 20% of the insured amount, subject to reassessment, rather than a one-time payment. Additionally, AIA has developed its own revised TPD product.

Regulatory bodies have noted the strain on these products. Jane Magill, executive director at APRA, remarked at the 2026 All Actuaries Summit that the rise in mental health TPD claims represents not just an increased volume, but a fundamental shift that the original product design was not equipped to handle. For advisors, the implications of TAL's research are overshadowed by the challenging pricing landscape, with clients depending on default super cover facing sharp premium increases and navigating choices between traditional lump-sum TPD and new staged-payment options.