With eighteen states accompanied by Washington DC now allowing marijuana for medicinal use, you and your clients may be wondering how life insurance companies are viewing this new outlook on marijuana usage.
Nearly 40% of the states have legalized the medical use of this substance. In addition, eleven more states have pending or failed legislation. Scientific research has unveiled medical benefits to marijuana that were once unknown. Life insurance underwriters are now faced with how to rate the usage of this medicinal substance.
Medical marijuana is used to treat a wide array of diseases and illnesses including, but not limited to, chronic pain, insomnia, unintentional weight loss, nausea, premenstrual syndrome, asthma, and glaucoma.
The eighteen states (along with Washington DC) that have now legalized marijuana are Alaska, Arizona, California, Colorado, Connecticut, Delaware, Hawaii, Maine, Massachusetts, Michigan, Montana, Nevada, New Jersey, New Mexico, Oregon, Rhode Island, Vermont and Washington.
With so many states legalizing the medical benefits of this drug, will life insurance companies also acknowledge the good? The answer: It depends.
These tips will help your clients get approved for life insurance if they use marijuana. First the applicant needs to disclose the marijuana use information up front. If marijuana shows up on blood or urine tests, without the applicant telling the carrier, the applicant will be declined. All carriers will require a drug questionnaire when you disclose this information upfront, as they will want to know the reasons for use as well as how often. All carriers will also require a urine test.
Each life insurance company has its own guidelines and underwriting rules; therefore the use of marijuana is viewed differently by each. Some companies will rate applicants as a standard smoker, giving them double the rates of those as a nonsmoker while others are okay for occasional use. The rules and ratings vary widely. Let’s take a look.
Ratings for the marijuana user
Marijuana usage is not viewed as other drugs such as cocaine, for example. Testing positive for THC will not lead to a flat rejection of a life insurance policy. However, the use of this substance can result in receiving a cigarette smoker’s rates, which are substantially higher than those of a non-smoker.
Life insurance classifications for a marijuana user are guidelines and are not set in stone; they can change at any time per the company consideration. Also other health conditions could change consideration. The majority of the company information below comes from a blog researched and written by Jeff Root, owner of Root Financial.
● American General: Smoking marijuana more than twice monthly could result in the rates of a smoker with the possibility of a table rating. Smoking two times per month will set the rating as a standard non-smoker. Applicants who smoke two times a year or less could be rated as a preferred best non-smoker.
● Banner Life: Applicants could be considered a standard smoker with occasional use. They could be rated as a substandard table B smoker with daily use.
● Columbus Life: Applicants over 25 years old who smoke pot experimentally to intermittently might get standard smoker rates. Moderate use could be a table 2 rating. Heavy use will be declined. Other drug use will also be a factor.
● Genworth Financial: Applicants who use marijuana eight times a month or less could be classified as a standard smoker. Users who smoke more than eight times may be considered a sub-standard smoker. Also, this company does not recognize prescription use of marijuana.
● ING Reliastar: If marijuana is prescribed, users could be classified as a Table 4 Smoker. With daily use, they could be classified as a preferred smoker.
● Lincoln Benefit: If a prescription is shown on one’s medical records and usage is stated on the application, applicants could be classified as a non-smoker. Occasional users without a prescription can be classified as a standard smoker.
● Lincoln National: Applicants can use marijuana up to two times per week and be classified as a standard non-smoker. Usage of 3-4 times a week will result in a sub-standard Table B non-smoker rating. Applicants will be declined if they use marijuana more than four times per week.
● Met Life: Applicants who otherwise would merit a preferred plus rating and uses marijuana occasionally (once a month to once a week) could get a preferred plus non-smoker rating. (More than once a week is equivalent to a smoker’s rate.) Daily use could be a table 4 rating. Heavy users could be declined.
● Mutual of Omaha: Applicants will rate as a standard nons-moker with up to weekly use. If lab results indicate more frequent usage, then smoker rates will apply.
● Minnesota Life: Applicants who test positive for THC could be given a smoker table 3 rating. Occasional or recreational users will be given preferred non-smoker rates but will have to test negative for THC.
● North American: Applicants over 25 years old who use marijuana 3-8 times per month could be rated a standard smoker. If they use 8-16 times a month they could be rated as high as a table 2 smoker. More than 16 times a month will be declined.
● Protective Life: Marijuana use could result in a standard smoker rating.
● Prudential Financial: Using marijuana up to two times per month and testing negative for THC will qualify applicants as a standard plus non-smoker. A Table B non-smoker (even with THC positive lab tests) rating will be applied if usage is up to four times per week. Usage over four times weekly will be declined.
● Transamerica - Marijuana smokers could be considered a standard smoker rate class with no other health issues.
As you can see, life insurers’ ratings for marijuana users vary widely. Even if medical marijuana is prescribed, applicants could be still be classified as a smoker or declined. For those of your clients who use marijuana medicinally or recreationally, it is essential that you, as their advisor, research life insurance companies before applying. When combined with other health problems, marijuana usage will not be well received by an insurance underwriter.
Applicants who already have a life insurance policy in force may be paying unnecessarily high rates. Each company’s insurance underwriters view the use of marijuana differently. Don’t let your clients pay high life insurance premiums if less expensive alternatives are available.