The best examples are Jacob’s ladder (1990) and the PlayStation 2 video game Silent Hill 2 (2001). While they do use delusion and/or hallucination like devices in their stories, they do more than just use them for shock value or to describe mental illness (usually in a negative light). Bringing up those very serious and alarming symptoms help question reality, but instead of being used to support supposed mental instability, it is used as a springboard to expand on the deep and intense feelings of their protagonists - to describe personal suffering.
When words fail to describe very real pain in life, the expression of our emotions is often better met through connection with art. When horror makes a point of illustrating intensity, it can relate internal conflict like no other. Suddenly the monster isn’t just a monster anymore, it can be say, the embodiment of a character’s resentment towards their father, or perhaps more vague still, repression incarnate. When other pieces of the story become connected commentary, as abstract as it may be, it can create a work of art that leaves an impression, makes you think, ignites conversation and can connect with people on a personal level. Do the two aforementioned titles do all those things? To varying degrees, yes, but is in no way as “good as it gets” as far as psychological horror is concerned. It has yet to be developed in that aspect. The trick is to weave a coherent story, haunting enough to stand on its own, but have all the elements with which to be transform into something more profound for those who go looking for it.
Psychological Horror can be an important tool in expressing life’s otherwise difficult to describe personal horror, its ongoing torment and ultimately healing.
Psychological Horror can be meaningful.
Psychological horror can be art.
Psychological Horror has its place.
And needs your help
If you can - make it, promote it, read or watch it, write about and discuss it. Help it grow by sharing how it’s different from the other horror sub-genres.
Indulge when it finds you, and you may find yourself in it.