Mental Health Claims Surge Highlights Need for Quality Insurance and Personal Advice

Written by Christopher Hall, AdvDipFP | Authorised Representative, AFSL 526688 | July 2025

Australians are leaving the workforce permanently due to mental health conditions at record rates, with new data revealing over $2.2 billion paid in mental health claims last year alone. According to the Council of Australian Life Insurers (CALI), mental illness is now the leading cause of total and permanent disability (TPD) claims - accounting for nearly one in three payouts.

Income protection claims have also seen a sharp rise, with one in five claims now related to mental ill health. In 2024, income protection pay-outs linked to mental health totalled $887 million. The rise is particularly steep among younger Australians, with mental health-related TPD claims increasing by a staggering 732% for those in their 30s over the past decade.

These figures highlight the growing need for high-quality, tailored insurance products—particularly for mental health conditions, which often involve complex and long-term impacts. Generic or default insurance through superannuation may not offer sufficient protection or clear terms, especially for mental health claims.

Having a qualified financial adviser is increasingly essential. An adviser can help assess occupational risks, compare policy exclusions, and ensure individuals have the right level of cover specific to their needs. With mental health now a leading driver of long-term disability, the value of personalised advice and well-structured insurance cover has never been clearer.

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About the Author

Christopher Hall, AdvDipFP, is the principal financial adviser at Arrow Equities and an Authorised Representative under AFSL 526688. He has completed more than 500 life insurance policy reviews for Australian families, with a specialisation in life risk insurance.

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