POT AND LIFE INSURANCE: ANSWERS TO THE 10 BIGGEST QUESTIONS
Society’s perceptions of marijuana have undergone a drastic change since I was in junior high. Back then, it was normal for schools to assign Tuned Out as part of the curriculum and show “Reefer Madness” in class, with the intended purpose of teaching us that pot would turn you into an acid addict who would eventually go crazy or that getting stoned would result in a horrific car crash.
It’s true that pot could be a gateway drug for some people, and driving while impaired is always dangerous, but society as a whole has developed a much greater comfort level with marijuana. Is this change reflected in the life insurance industry? Through the years, I have helped many pot users purchase a policy, and these are the questions that often come up.
1. How Does Marijuana Affect Your Mortality?
While there is certainly valid information that shows the positive health effects of marijuana use, there is equally compelling data that points to the downsides of the drug on your health. Life insurance underwriters look at the impact on the total body. Here are some of their primary concerns:
- Impaired driving
- Acute respiratory illness and infections
- Addiction, leading to risky behavior
- Increased heart rate, potentially leading to a heart attack
- Mental illness, including temporary psychotic reactions, depression, anxiety, suicidal thoughts, and personality disturbances
- With pregnant women, postpartum neurological issues
Clearly, each of these conditions could potentially impact your mortality.
2. Is Smoking Marijuana Treated The Same As Smoking Tobacco?
To a large extent, yes. Carriers tend to view both activities the same way, but they can differ from one another in how they treat these activities. Some will make their best underwriting class available while others will automatically assess an extra premium with a table rating.
A number of factors impact this determination, including frequency and dosage, how the marijuana is used (smoking, ingestion, or vaporization), and the age of the insured.
3. How Is Age A Factor In Underwriting Marijuana Users?
Some carriers perceive an increased mortality risk in younger users. They have good reasons for this, especially when it comes to automobile deaths. Therefore, they will not issue policies to people below a certain age, or, if they do issue a policy, they may automatically assess a table rating extra premium for those below a certain age. On the other hand, some carriers do not set a minimum age limit for this scenario.
4. Should I Stop Using Marijuana For A Few Weeks To Qualify For A Non-Smoker Rate?
Believe it or not, not every carrier tests for marijuana on every insurance exam. Carriers who don’t are relying on your application disclosures to underwrite you. While some people may be tempted to lie under these circumstances, there is a strong discouragement to do so.
First of all, even if your drug test comes back clean, your medical records may indicate your marijuana use since physicians often make a note of this in their charts. If you don’t acknowledge your use of pot on your application, you run the risk of being declined automatically. Underwriters don’t like it when it appears the applicant is trying to get away with something.
Secondly, your application requires you to sign a statement to the effect that, to the best of your knowledge, your answers to the questions are truthful. If you willingly withhold information, you could be accused of committing insurance fraud. The carrier would be within its rights to not pay the benefit, even if the cause of claim has nothing to do with drug use.
Also, cheating can artificially increase prices. Insurance companies need to make an accurate assessment of the risks they assume to ensure sufficient money has been allocated to meet anticipated claims. If they are not entirely aware of all the risks involved, they may underfund their reserves. This could result in an increase in prices to make up the difference, and you and everybody else could end up paying more than you should be.
Lastly, remember that your broker has an ethical and legal responsibility to report everything he knows about the underwriting risks you represent. This includes both medical and lifestyle-related risks, including anything you tell him about your personal habits. No such conversation is “off the record.” He cannot do you a favor or bend the rules to get your business because he could face fines, suspensions, and/or lawsuits.
5. Will How I Use Marijuana Change My Premium Price?
Many people don’t smoke marijuana. Instead, they eat it in home-baked goodies or vaporize it. How you get the drug in your system could result in a price break. There are some carriers who distinguish between smoking, ingesting, or vaporizing. The difference could be as significant as being rated a non-smoker as opposed to a smoker. Again, many other factors can influence what rate class you are assigned.
6. Will An Underwriter Recognize the Difference Between Medicinal and Recreational Use?
The odds are that you’ll be treated as a recreational user. It still boils down to how much you use, how you use it, and how frequently you use it.
It is crucial to recognize that the medical condition for which you have been prescribed marijuana will also be underwritten. All other factors being equal, conditions such as chronic pain, muscle spasms, and even PTSD may not require too much of an extra premium. But cancer, hepatitis C, and multiple sclerosis could result in a higher payment or even a declined application.
7. If I Purchase Insurance Now But Stop Smoking Later, Will My Rate Be Reduced?
It’s a good decision to get the policy now. If you need the coverage, you get it. You don’t want to wait for the optimum time to buy, because tragically, a claim may have to be paid in the meantime. You don’t want to shortchange your beneficiaries on the money they will need upon losing you.
Once you are insured, we can work on reducing the cost. When you have stopped using marijuana for a full year, you could very well be eligible for a lower premium. If things don’t work out for you, and you develop an unforeseen medical condition, then at least you will have life insurance in play! We can always try again the following year.
8. Will I Get In Trouble For Disclosing That I Use Pot If It Is Still Illegal In My State?
That’s a valid concern. Many people are uncomfortable with acknowledging their pot use when it is deemed illegal. However, you are protected by very stringent privacy protection regulations. Here is verbiage that is very typical among carrier contracts:
(Company) does not disclose any non-public personal financial or any non-public personal medical information about our customers or former customers to anyone, except as permitted or required by law. It is (Company’s) current policy not to disclose customer information to, or share customer information with, other businesses for marketing purposes.
9. Is It Possible To Get A Policy That Has A Marijuana Exclusion?
Yes. There are excess-market carriers that would not factor in your pot usage when they underwrite you. Your policy would have a clause that states they are not liable for a claim that is drug-related. Bear in mind that these policies are typically available only under specific business or financial circumstances, and can be more expensive than policies from mainstream carriers.
10. Marijuana Has Great Profit Potential. Will I Be Able To Obtain Life Insurance To Cover The Business?
We are all aware of the importance of life insurance for buy-sell funding, key person coverage, business loan protection, and other business needs, but is life insurance available for those on the business side of marijuana?
This question is perhaps the biggest indication that marijuana use has become an accepted norm in our society. If you can legitimately go into business selling it, then there can’t be a problem with it, right?
Of course, the key word here is legitimate. On the one hand, life insurance carriers don’t take on the responsibility of determining the legality of any applicant’s business. At the same time, I have not come across a domestic company who would offer a policy to somebody in this business, probably because they are still waiting for legalization. Nonetheless, there are foreign insurers that would provide coverage in this situation. While they often insure business people who provide services around the sale of marijuana, they would consider prospects directly involved in selling.
Just like alcohol and tobacco use, a history of using marijuana can affect your access to life insurance, but as times have changed, so has the life insurance industry. Prequalification would determine exactly how your particular use of marijuana would be treated by an underwriter, but you can still qualify for life insurance. If you have questions that were not addressed in this post, or if you are concerned about the premium costs for your unique circumstances, I am here to help. Contact me at skobrin@stevenkobrin.com so we can research your options and find a life insurance policy that will fit your needs.