"Insanity"?

Well, or "Being a high school student," maybe.

Haha true! Surely there is a term for this particular branch of insanity lol?

Well, it's sort of a thoroughgoing nihilism, but "nihilism" is not necessarily a good word to use because it has so many different conventional connotations, many of which are incompatible with that view.

Otherwise it would depend on just what the person believes, just what their ontology is. It could simply be an example of (philosophical) idealism.

I have encountered a few who through a literal interpretation of buddhist philosophy ...aka a misunderstanding of its philosophy, believe in the fundamental non existence of reality....what is the name for this philosophical stance? — Arran

My guess it's that you are misunderstanding their misunderstanding.

In any case, there is no literal interpretation of Buddhist philosophy because there is no one Buddhist philosophy. There is a multitude

Let's not get into "misunderstanding their misunderstanding" and whether its them that have misunderstood,me, or you. Instead let us concentrate on the question of what the belief of the fundamental non existence of physical reality is called...?

Instead let us concentrate on the question of what the belief of the fundamental non existence of physical reality is called...? — Arran

This concept it's extremely difficult to interpret without further context and description.

What I might suggest world be a form of non-existence, might be the state of sleep when not dreaming. This might be analogous to the state of death. This may be what it's being referred to.

Metaphysical nihilism. On the weaker side it only posits that there is a possible where nothing exists, and on the stronger side it posits that nothing exists in the actual world.