Category: Life Insurance Blog
Life Insurance for Marijuana Users
April 4, 2017 Richard Reich
Many people are under the impression that you cannot buy life insurance for marijuana users. In fact, many applicants lie about their usage and then are denied coverage, not because they use marijuana, but because they lied about it. Insurance companies refer to this as misrepresentation.
The truth of the matter is using marijuana does not preclude you from purchasing life insurance, and in many cases, it does not have an impact on your rates. Insurance companies, although historically conservative in their underwriting guidelines, have begun to take a more liberal approach to applicants who claim to use marijuana.
Your Right to Privacy
Many consumers, who use marijuana recreationally or for medicinal purposes, are concerned that the insurer will report their marijuana use to local authorities or their employer. This is a misunderstanding due to misinformation they get from family and friends.
Federal HIPPA laws forbid insurance companies and their agents from sharing any personal or medical information about clients, prospective clients, and former clients. The federal HIPPA laws are strictly enforced by the U.S. Office of Civil Rights and are adamant about protecting the privacy rights of citizens. Your health information cannot be shared with any federal, state, or local agency without your express consent.
Typical Misconceptions about the Application
Although marijuana use remains illegal under federal law, many states have legalized its use for medical purposes, and some have legalized it for recreational use as well. If you admit on your insurance application that you use marijuana, no matter what the reason is, you are not likely to be flatly refused life insurance coverage. Many companies will rate you as a smoker which results in much higher rates, but they will not decline your application because you use marijuana.
It’s important that you provide accurate information about your marijuana use on the insurance application. Companies who fully underwrite their applicants will typically order a medical exam and drug test, so you might as well be honest and up front about it. If you say you don’t use marijuana, but it’s found in your blood test, the insurer will likely consider your answer on the application as misrepresentation and decline your policy.
Medical Use versus Recreational Use
Whether you use marijuana for medical purposes or recreationally, the underwriter will need more information about you. Since medical marijuana is typically prescribed to relieve pain and nausea, your insurance underwriter is going to be more concerned about the illness or disease that is requiring your prescribed use of marijuana.
You should be prepared to provide the contact information for the prescribing doctor so the insurer can contact them about your underlying health issue. The insurer is not as concerned about your use of medical marijuana as they are about why you are using it.
For people who are smoking marijuana, there is good news since life insurers are taking a more liberal stance when it comes to recreational use. While most insurers will automatically rate the marijuana user as a smoker, there are several companies that will allow standard rates for those who smoke only a few times per month. In fact, some carriers will go as far as offering preferred rates if you only use edibles and do not smoke at all.
Will the Insurance Company Require a Medical Exam?
If your plan is to get the most affordable insurance rates, then it is very likely that the insurer will require a medical exam. Life insurance medical exams are typically done by a nurse or other licensed individual and can be done at your home or place of business. The examiner will ask the appropriate medical questions, determine your height and weight, check your blood pressure, and in many cases, collect a blood and urine specimen for analysis.
Once the exam is completed, the specimen is sent to a lab for testing, and all results are sent to the insurance underwriter for a complete review. Your medical records will also be ordered from your doctor and any medical facilities you’ve listed on the application.
After the underwriter has reviewed all of this medical information, they will assign your classification and send it to the agent who is representing you. Your agent will then finalize your insurance rate and if you decide to proceed, send the signed application to the company along with the premium required to issue the policy.
What if My Test Results Reveal Other Health Issues?
Sometimes the medical reports may reveal health issues that you were not aware of. For example, many people discover they have Hepatitis C after getting a blood test. Since the disease rarely presents any symptoms many people find out by accident they have been infected. In cases like this, the test results would be forwarded to your doctor who would take responsibility for contacting you. Your agent will know that an issue was discovered but not the nature of the issue.
What Happens if My Application is Declined?
If the insurance company is unwilling to offer coverage because of issues discovered during the underwriting process, your agent can offer you a non-medical policy, also known as guaranteed issue insurance. This type of policy is issued without regard to your health history and has no medical questions on the application.
A non-medical insurance policy is issued very quickly, and you can likely get coverage in about 48 hours. The rates are higher since the insurer is willing to issue the policy with no medical underwriting. There is also a two or three-year waiting period where the insurer will not pay the full death benefit if you die from natural causes. Most companies, however, will return all the premiums paid in plus a small percentage. If you die during the waiting period because of accidental causes, the insurer will pay the full death benefit.
How do I find a Qualified Agent?