Is mental illness the Cinderella of the private health insurance world? Bupa this week came under fire after it emerged that, in contrast to other insurers, it stops paying for the treatment of psychiatric disorders after two years – even though other illnesses are covered for much longer.

The restriction emerged after Guardian Money was contacted by Graham Russell, who was originally diagnosed with severe clinical depression, and says Bupa's psychiatrists and nurses "probably saved my life". However, he was recently shocked to discover the health insurer does not pay for treatment if you suffer from a psychiatric condition over a period of two years or more (see his story below).

Yet while some people who develop a mental illness will only have one episode during their lifetime, others will have several, or will have to learn to adapt to living with an ongoing mental health problem that could involve appointments and treatment for many years.

Russell claims Bupa's two-year rule is totally out of line with its policy on other illnesses such as cancer, where it would continue to pay up.

If you have a health insurance policy and you develop a mental illness, the provider will usually impose a "cap" on the maximum amount of psychiatric treatment you can receive. This will typically take the form of a defined period (up to 28 or 45 days per year are common) or a monetary limit.

Another problem can arise, too. Health insurance, say the companies that provide it, is designed to cover "acute" conditions – ie curable, short-term illnesses or injuries. If your illness is deemed to be "chronic", or long-term, and the treatment is only serving to alleviate the symptoms rather than cure the problem, that is the point when insurers will typically stop providing cover.

However, other leading insurers told Money they do not operate a restriction like Bupa's. PruHealth says: "We do not apply a qualifying period or a definite time limit (as experienced by your reader) against our psychiatric cover."

Aviva told us it also doesn't impose a specific time limit on cover, adding: "As with other treatment on our policies, as long as the customer is claiming for an 'acute' condition (or for an acute phase of a chronic condition), we'll continue to pay for treatment based on their needs and the benefits they've selected."

Bupa told us: "As explained in Bupa's membership guide, Bupa does not pay for psychiatric treatment if you suffer from any psychiatric condition, or symptom of any psychiatric condition, over a period of two years or more. The two-year limit has always been part of the terms and conditions of our policies." Asked if the rule would apply to something like breast cancer, she told us: "That is completely different. This is very specifically for psychiatric treatment."

The cover provided by a health insurance policy for mental health problems will vary between insurers. In some cases, a certain amount of psychiatric treatment will be included within the policy as standard; in others, it will be something you can buy as an add-on. It also depends if it's an individual policy or a company health insurance scheme.

For example, Aviva's Healthier Solutions policy for individuals offers up to £1,000 worth of psychiatric treatment as an out-patient (per person per year). However, you can boost this to include in-patient and day-patient treatment for conditions such as schizophrenia or clinical depression for a 7.5% increase to your premium.

Aviva says the extra psychiatric cover that policyholders are able to buy "is not particularly popular, as customers prefer to opt for benefits such as dental and optical cover". Dave Priestley, PruHealth's sales director, says it appears that psychiatric cover is an option that has a "lower perceived value" than some other policy benefits. It is still very much a taboo subject, but it is estimated one in four of us will be affected by some form of mental illness at some point in our life.

The high-profile Time To Change campaign, led by the charities Mind and Rethink, is trying to break down the stigma associated with it. However, the announcement earlier this month that the actor Catherine Zeta-Jones was being treated for bipolar disorder, also known as manic depression, will hopefully make it easier for others to talk about their illness.

(Graham Russell is a pseudonym)

Case study: Graham Russell

There was only one good thing about being diagnosed with severe clinical depression in 1997: my wife's Bupa scheme picked up the tab for several weeks of hospital treatment, followed by more weeks as an outpatient.

I've had four or five serious depressive episodes since, though, thanks to the same doctors, each time I got help before the symptoms became so bad that I needed hospitalisation. Bupa again paid the bills.

Earlier this year I became depressed again, and arranged to see the psychiatrist. Again, he managed to keep me out of hospital. A while later I rang Bupa to reclaim the money for my psychiatrist's appointment. It wasn't a huge amount – £300 – but worth having, especially as my wife had been contributing to the scheme for the best part of 20 years. After a longish pause, I was told I wasn't covered for any psychiatric condition that lasts for two years or more, regardless of whether or not the treatment is ongoing or continuous. After that, you are on your own.

I put the phone down and checked the Bupa membership guide. The woman was correct. I was disqualified. Which didn't explain why Bupa had been happily coughing up for my intermittent treatment over the past 14 years. Or why it had never bothered to inform my wife she was paying for a benefit to which I was not entitled.

Recently my wife left her job, but we wanted to continue with the scheme. The broker we were dealing with said they would email us a range of options and policy excesses, including with and without psychiatric treatment.

Before we signed the new contract, I suggested to my wife that it might be a good idea to double-check the psychiatric provisions. My wife called the broker again. They told us we were definitely covered – then there was a long pause and they said that, no, we didn't appear to be covered after all.

• A Bupa spokeswoman said: "Each year, when the policy was renewed, he would have received a guide setting out what is, and what is not, covered."

Russell began psychiatric treatment in 1997 and "due to an administrative error on Bupa's part, we continued to pay beyond the two-year cut off period". At no point did he call Bupa to pre-authorise his treatment, she said.

"We are sorry [they] received inconsistent information about Bupa's approach... when they wanted to transfer from a company scheme to a personal one. We strive to provide clear information to all our customers – whether directly through Bupa or via intermediaries, which is the route they [the Russells] took on this occasion."