Here's a simple example: two people have similar depression issues. One seeks treatment - is prescribed a drug and therapy. Two years later, they are better and back to drug free. The other doesn't and has more recurrences and longer depression bouts. Which gets a better life insurance rate?

That's not being used against you. That's a situation where they have a genuine need to know your health in order to properly estimate your share for a policy. Yes, it's imperfect, but generally people don't volunteer the truth so we have to rely on documenation. As someone with depression, yes, I understand why I pay a little more for life insurance.