Australia’s life insurers are warning the nation’s financial safety net is being pushed to its limits, with more Australians leaving work permanently due to mental ill health than ever before.
New data from the Council of Australian Life Insurers (CALI) reveals that mental health is now the leading cause of total and permanent disability (TPD) claims, making up almost one in three1 claims paid.
In 2024, insurers paid out more than $2.2 billion2 in mental health claims – almost double the amount paid just five years ago3.
Mental ill health is also driving one in five income protection claims, with payouts totalling $887 million2 in 2024 alone.
“Australia is reaching a tipping point. The entire safety net, not just life insurance, is under pressure,” said CALI CEO Christine Cupitt.
“Every year we see a growing number of people, particularly younger Australians, leaving the workforce for good due to mental health conditions.”
The rate of TPD claims for mental health among people in their 30s has increased by 732% over the past decade4, yet a lump sum payout may not provide lasting financial security, particularly for younger Australians with decades of potential working life still ahead.
“This should not be the story of young Australians experiencing mental ill-health. People are being left with little choice but to label themselves totally and permanently disabled, even where the medical evidence shows there is a chance they could return to work.
“It’s a square peg in a round hole and clear evidence that more needs to be done to build a mentally fitter community,” said Ms Cupitt.
“Insurers will always be there for the Australians who are most deeply affected by mental ill health but we are having to rethink how we better serve customers in the decades ahead.”
1 Based on data included in the 2024 H2 CALI – KPMG Data Collection Cause of Claims Results (“COC Results Report”) (Released 30 May 2025)
2 Based on data included in the 2024 H2 COC Results Report scaled to the APRA Life insurance claims and disputes data December 2024
3 FSC Media Release, Productivity Commission Recommends Increased Life Insurance Funding for Mental Health, 17 November 2020
4 Australia’s Mental Health Check Up by KPMG