Insurance is a confusing topic for most people. Lots of us like to think that we understand risk mitigation and how it’s structured, but unless you’re in the business, you’re pretty much guessing or listening to others who know less than you do. Because of this, there are many myths aboutmarijuana and life insurance that are floating around and making matters even worse.
Some of us who work in the industry make an attempt to educate our clients and prospective clients, but in almost every case, we need to “unlearn” them and put out the fires that are generally caused by myths. Here we will attempt to correct the record about marijuana and life insurance.
Marijuana Smokers are always Classified as a Smoker
Not true! For those who partake in occasional marijuana use, almost 30 percent of life insurers will not automatically classify you as a smoker. The term “occasional” is defined by the insurer so check with your insurance agent to find out what it means. In most cases, your independent agent will simply ask how much and how frequent you smoke marijuana, and then work backward to find the most appropriate insurer with the best rates.
It’s important to note that if you smoke tobacco products, all bets are off. You will be classified as a smoker and typically will pay double the non-smoker rate.
You can fool the Insurance Company if they don’t require a Blood or Urine Test
Certainly, there are many life insurance companies who do not require a medical exam or blood and urine test to buy insurance. But, you will pay more for your insurance since your policy is not fully underwritten, and there’s this thing called a “contestability period.”
All life insurance policies contain a contestability clause. What it means is quite simple. If you should die within the contestability period (normally two years), the insurance can investigate the answers you provided on your application before paying the claim. If they find that you misrepresented yourself on the application, such as lying about pot or other drug use, they can deny the claim and not pay the death benefit to your beneficiary. Certainly, you should understand that any company, which offers insurance with no medical exam or blood test, is going to pursue this investigation with gusto.
All Life Insurers treat Marijuana Use the Same Way
Once again, this is a myth. How you use marijuana does have an effect on your insurance rates. Depending on the life insurer, it can make a substantial difference if you ingest marijuana using edibles, or if your marijuana use is legally considered medicinal.
Since insurance underwriters are still not 100% certain if marijuana affects a user in a physiological sense, they take a more liberal outlook if you ingest marijuana rather than smoke it. As far as medicinal marijuana use, the underwriter is not as concerned about the marijuana use as they are about the underlying health condition that warranted the prescription.
Here again, relying on an experienced independent agent makes the best sense. Agents who represent “marijuana friendly” insurance companies do so on purpose. They want to have access to insurers that take a liberal view when it comes to marijuana use.
You cannot get Preferred Rates if you use Marijuana
Fortunately, there are a couple of insurers willing to offer preferred rates if your use is minimal and you have no other health issues such as hypertension, diabetes, or cholesterol issues. MetLife probably leads the way when it comes to life insurance and marijuana use.
The company, which is highly rated by A.M. Best, is willing to offer non-smoker rates for applicants who smoke marijuana four times a week or less. They are even willing to offer preferred rates for applicants that ingest edibles rather than smoke marijuana.
It’s important to note that the difference between nonsmoker and smoker rates is substantial with smoker rates being more than 50 percent higher than non-smoker rates.
Your Insurance Company can Report Your Marijuana use to Your Employer
The HIPPA act which is enforced by federal law prevents your insurance company and your agent from disclosing any sensitive information on your insurance application to a third-party. This includes your employer (even if it’s the government) or to any law enforcement authority. They also cannot disclose the result of your medical exam or blood/urine test.
If the insurance company declines to offer you coverage or if your application is declined because the company has discovered misrepresentation, they will report that information to the Medical Information Bureau (MIB), but they cannot disclose any sensitive medical information when doing so.
Since Smoking Marijuana is legal in My State, They have to Insure Me
This is an assumption that can be easily made using logic, but unfortunately, it’s simply not true. In fact, alcohol consumption is also legal in every state, but if you consume too much, your insurer will likely deny coverage.
Since 29 states have legalized medical marijuana and eight states plus the District of Columbia has legalized it for recreational use, many pot smokers just assumed that the life insurance companies wouldn’t even ask about it. Although every life insurer has their own underwriting guidelines, and many will not decline coverage for marijuana use, they don’t have to cover you.
We all know that age and health history play a big factor in insurance rating, but so does lifestyle. If you confess on your application that you smoke marijuana, you’ll likely not have a problem. But, if you indicate that you do it every day and your marijuana use has affected your health, driving record, or employment, your insurer will likely decline your application.
If you are concerned about things you’ve heard about marijuana and life insurance, or you are considering an insurance purchase, get the facts from the people who are paid to know what is a myth and what is the truth. Call an independent insurance agent who represents many insurers and is aware of each company’s underwriting guidelines, and get the facts you need to make an informed decision.