How Marijuana Use Affects Your Life Insurance Policy
There’s good news on the life insurance front for marijuana users – you can get a policy.
Especially now that cannabis has become legal in many states, life insurance companies have opened their collective arms to this group.
That doesn’t mean you won’t pay extra for life insurance if you use marijuana – you absolutely will.
But one advantage you will have is that life insurance companies consider the frequency of use in determining your health rating, which means casual users will pay lower premiums than heavy users.
It is a bit of a gray zone, since life insurance companies have only been accepting marijuana users in recent years. Some of the details are still being worked out.
Why Do Marijuana Users Have Higher Life Insurance Rates?
Each life insurance company has its own way of interpreting and rating marijuana users.
But there are three primary risk factors associated with marijuana use:
Much like alcohol, marijuana can impair your judgment and alter your perception of reality.
While that can introduce certain risks into your life, such as accidents, the real issue is how it may impact driving.
There’s a reason why many states use the term Driving Under the Influence, or DUI.
It’s a broader term that covers impairment due to drugs – including weed – as well as alcohol.
You’re a higher risk of being involved in a car crash after smoking marijuana, which also raises the risk of death.
Though many life insurance companies don’t categorize marijuana use in the exact same context of cigarette smoking, there have been certain health risks associated with regular marijuana smoking.
Some companies will consider smoking marijuana the same as tobacco.
Others will take a more liberal view and consider marijuana use as a lower risk category.
That marijuana may be used to self-medicate for an underlying health condition.
A life insurance company may be just as concerned about the use of marijuana to treat an underlying condition as they are the marijuana use itself.
For example, some may be using marijuana to help deal with anxiety, depression, chronic pain and other debilitating conditions.
The fact that you use marijuana may be a tipoff to the company to look for other health risks.
There may be other conditions life insurance companies evaluate in connection with marijuana use, so it will be important to work only with the companies that take the most favorable view of the practice.
The Effect of Marijuana on Life Insurance Rates
There are five basic health classifications life insurance companies use in determining your premium level:
- Preferred Plus
- Standard Plus
- Substandard (which leads to premium pricing based on “table ratings”)
If you are a marijuana user, it’s not likely you’ll qualify for Preferred Plus or Preferred.
Those ratings are reserved for those in excellent health, and with no high-risk habits.
The best rating you’ll get is Standard Plus, which means you’ll get a lower premium than someone in average health who qualifies for a Standard rating. Otherwise, expect either a Standard or Substandard rating.
To qualify for a Standard Plus rating, you’ll need to otherwise be in good or excellent health.
That will mean you have no chronic health conditions, like diabetes or hypertension, and no previous episodes of major health events, like cancer or stroke. You’ll also be a non-tobacco smoker, with a proper weight-to-height ratio, and no serious history of health conditions in your family line.
If you do have a condition or two, like hypertension or obesity, the best rating you’re likely to get will be Standard. But if you have more serious conditions, like heart disease or diabetes, you’ll be given a Substandard rating.
That’s the Standard premium rate, plus an additional premium based on the level of risk your health profile presents.
Most companies have 10 table ratings, with a 25% increase in the Standard premium for each numeric rating.
Life insurance table ratings
|Premium Increase Over Standard Classification
|1 (or A)
|2 (or B)
|3 (or C)
|4 (or D)
|5 (or E)
|6 (or F)
|7 (or G)
|8 (or H)
|9 (or I)
|10 (or J)
Though you’ll never get the best premium rates a company will offer as a marijuana user, how much you’ll pay for the premium will largely depend on the state of your health apart from your marijuana use.
What Counts as Marijuana Use?
Unlike cigarette smoking, where life insurance companies often don’t differentiate based on frequency of use, frequency is a factor with marijuana use.
For example, a casual user – which will be determined by the insurance company – will pay lower premiums than a regular user. The insurance company may determine a regular user as someone who uses marijuana on a daily basis or multiple times weekly. A casual user may be defined as one or two uses per month or per week. It all depends on the insurance company you’re making an application with.
Under a worst-case scenario, a life insurance company will consider marijuana use as the equivalent of smoking.
That will be the worst insurance company to apply to because premiums for smokers are generally much higher than they are for marijuana users.
The health risks of tobacco are much more well documented and understood than they are for marijuana. Tobacco smoking, for example, has been closely linked to lung cancer and other types of cancer, as well as stroke, heart attack, asthma, and COPD.
The reason you use marijuana is also important. If you use it recreationally, and only occasionally, the premium adjustment may be minor.
Ironically, premiums could be higher for medicinal marijuana use than for recreational use.
Most life insurance companies will consider medicinal use of marijuana in a different category than recreational use.
There’ll be less of a hit to the premium for use of marijuana itself, but a greater focus on the condition that cannabis is being used to treat.
If you disclose using marijuana for medicinal purposes on the application, you’ll be asked to provide information about the underlying condition.
If it’s serious enough to warrant the need for regular use of marijuana, it’s likely to have a bigger impact on your premium than the marijuana use itself.
Also, be aware:
Heavy, regular use of marijuana could indicate an underlying medical condition.
Even if you don’t indicate the use as being medicinal, the insurance company may do a closer investigation to determine if an underlying medical condition may be the motivation behind the heavier marijuana use.
How Do Life Insurance Companies Know You’re a Marijuana User?
If you’re a marijuana user, you may be tempted to leave your cannabis habit off your life insurance application.
But don’t - it could lead to a lot of bad outcomes.
Though the insurance company will be relying on your application first and foremost, the underwriting process won’t stop there.
They have ways of verifying every claim – and every omission – your application contains.
Reviewing medical records
It’s standard operating procedure with life insurance underwriting to access industry databases to get information on your medical history.
The MIB is a medical repository dedicated to the insurance industry. The database contains records of your interactions with the healthcare industry over the previous seven years.
If any of that information presents a concern to the insurance company, they’ll get additional information from the healthcare providers.
If there’s any indication of cannabis use – whether for medicinal purposes or recreational use – it’s likely to turn up in the records.
As well, if you have any serious health conditions, like chronic pain or mental health issues, the insurance company will investigate further.
They’ll also check your driving records for the past few years with your state’s department of motor vehicles.
If there are any references to accidents or infractions while you were under the influence of marijuana, or even if it was found in your vehicle by the police, that information will show up in the records.
They may also perform a criminal background check, which could reveal any legal history that included use or possession of marijuana.
Consequences of hiding your marijuana use
The best possible outcome of failing to disclose your marijuana use on your life insurance application will be discovery by underwriting and a decline of your policy request.
The nightmare scenario will be failing to disclose the habit, and the insurance company not learning of it until after your death.
For example, let’s say you apply for life insurance and fail to disclose that you’re a regular marijuana user. The insurance company doesn’t uncover your habit and approves the policy. But five years later you die in an accident in which marijuana was involved. That can include either driving under the influence or even possession of marijuana in your vehicle or on your person at the time of the accident.
The insurance company will be legally eligible to withhold the payment of the death benefit to your beneficiaries while they investigate for insurance fraud.
If they’re able to determine that you were a marijuana user at the time you applied – but failed to disclose it on the application – they can void the policy, leaving your loved ones with no death benefit.
The most they’ll get will be a return of the premiums paid for the policy while it was in force, plus any interest added on.
In this example, your failure to disclose your marijuana habit at the time of application will deny your loved ones the proceeds of your policy upon your death.
What if I Start Using Marijuana After I Buy Life Insurance?
Generally speaking, once a life insurance policy is in force what happens afterward doesn’t have any effect on it.
For example, if you were to develop hypertension one year after taking a life insurance policy, the discovery of the condition would not alter the policy.
The situation is more complicated when it comes to marijuana use.
Looking at reasons for marijuana use
It’s not that marijuana use after policy approval will automatically invalidate the plan, but rather that it will open up the question as to exactly when you began using marijuana.
Once again, if the cause of your death in any way indicates you are a marijuana user, the insurance company will open an investigation.
They’ll be specifically looking to investigate if you were a marijuana user at the time you applied and failed to disclose it. If they can prove you were, they can withhold payment of the death benefit for insurance fraud.
Obviously, if you die for some reason that has nothing to do with marijuana use, the death benefit will be paid.
But, any evidence of marijuana use is likely to invite an investigation. Even if the investigation is resolved in your favor, your beneficiaries may have to wait weeks or even months for the benefit to be paid. They may even need to retain legal counsel to refute the insurance fraud claim.
You should also be aware that life insurance policies are complicated documents that contain plenty of fine print.
Read your policy as soon as you get it and read it carefully.
There may be provisions in the policy that will allow the insurance company to escape paying the death benefit if you engage in certain behaviors even after approval.
Marijuana use may not be one of them, but then again it might.
Probably the biggest myth surrounding marijuana use and life insurance is that it will be considered the equivalent of smoking, resulting in much higher premiums.
But in most cases, marijuana use will result in only a modest increase in your premium.
For that reason, it’s best to disclose the habit, pay a higher premium, and know that your loved ones will be covered regardless of the cause of your death.
The worst choice:
Make an application and not disclose your marijuana use.
Understand that life insurance companies don’t necessarily want to pay death benefit claims. If there’s a way they can get out of paying, they will. Not disclosing your marijuana use will leave that door wide open for that outcome.
Finally, all life insurance companies take a different view of marijuana use.
You’ll need to work with the companies that will be the most accommodating and avoid those that will immediately classify you as a tobacco smoker. The difference in premiums can be astronomical.