Psychological impairment is a broad term describing mental or emotional conditions that significantly interfere with a person's ability to function in daily life, maintain relationships, or perform work. It can result from depression, anxiety disorders, bipolar disorder, schizophrenia, PTSD, or other psychiatric diagnoses. Severity ranges from mild, well-managed symptoms to profound disability requiring hospitalization or ongoing intensive treatment. For life insurance underwriting, psychological impairment is relevant because it may correlate with elevated mortality, accidental death, substance abuse, and suicide risk. Underwriters evaluate diagnosis, treatment history, medication use, stability over time, and any functional limitations when assessing such cases.

In underwriting practice, references to psychological impairment in medical records prompt careful review of diagnostic labels, GAF scores or functional assessments, and notes from psychiatrists or therapists. Underwriters look for evidence of stability, adherence to treatment, regular follow-up, and absence of self-harm behavior in recent years. Advisors collecting information may ask clients about hospitalizations, disability claims, work status, and substance use to anticipate underwriting concerns. While mild, well-controlled psychological conditions often qualify for standard or mildly rated offers, severe or unstable impairment may lead to postponement or decline. Transparent communication helps clients understand that mental health, like physical health, is a key part of the risk profile insurers must evaluate.