How do life insurers treat cannabis use?

When marijuana laws changed in Canada last year, it had a ripple effect through several industries, including life insurance underwriting. Insurers had to come up with a solution for how to cover customers who use marijuana.

To achieve this solution, insurers researched the following:

• Are all marijuana users the same?
• How much risk does marijuana represent from the insurer’s perspective when compared to traditional smoking?
• Should joints (smoking), vaping (inhaling vapour rather than smoke) and edibles be treated differently?
• What does the long-term data show about the risks, if any, between marijuana use and health?
• Is marijuana habit-forming and if so, should it be considered an addiction risk?
• Does the amount per use and frequency per week matter?
• What are the differentiators between medical and recreational use?

We dug deeper into these topics to understand the details of offering insurance to people who use marijuana either for medicinal or recreational purposes. We also requested replies from several insurance companies, asking them how they view marijuana/cannabis consumption cases, and how term life insurance, whole life insurance and other insurance products are provided for marijuana users.

Not all insurers treat joints and edibles equally

Interestingly, not all insurers treat joints and edibles as the same product! This is where you should pay close attention as a customer, because this fact will strongly impact your premiums and ability to qualify for less expensive policies.

Here are the two approaches insurers choose:

1. Joints, vaping and edibles are the same
   This means if you consume marijuana in any form more frequently than a pre-defined threshold, the insurer will consider you an increased risk, similar to tobacco smokers.

2. Consumption of edibles is not considered the same risk as smoking or vaping
   In this case, a customer will be deemed a non-smoker even if he/she uses marijuana daily. That relates not only to edibles but also to other non-smoking marijuana intakes such as oils. An example of a company that treats their customers in this way is Canada Protection Plan (CPP).

How much marijuana is too much for insurers?

There is a clear difference between being an occasional user, who might lights up a joint once a month, versus a daily user. In the past, insurance companies defined a risk threshold as two joints or marijuana intakes per week. Meanwhile, some insurers are more relaxed and accept four intakes per week. Again, that is different from insurer to insurer, and working with an experienced insurance broker will help to find the best policy for your situation.

What happens if you are a more “active” marijuana consumer? Well, in this case, be prepared to pay extra for your insurance plan, as your insurer would see you being as risky as a tobacco smoker.

Which companies are offering insurance products to cannabis users?

In the past, there were just two insurers who were treating cannabis users as non-smokers: Sun Life and BMO Insurance. Today, virtually every insurer treats infrequent marijuana users as non-smokers, allowing them to benefit from lower rates.

However, remember that the definition of “infrequent marijuana/cannabis user” varies from company to company and typically is in the range of two to four intakes per week.

The way insurers determine if you are a cannabis user and how much you consume is based on urine and blood tests, which you need to take as a part of an application process; but, there are also other policies available to you that do not involve a medical test. (We’ll talk about them in a moment.)

What insurance options are available?

There are three scenarios, based on your particular situation:

Scenario #1: If you are an infrequent user, you will be able to qualify for standard life insurance with non-smoker rates (the most affordable option). Example: A 35-year-old female who gets coverage of $200,000 in standard life insurance for non-smokers will pay $16 monthly for her policy.

Scenario #2: If you are a frequent user (more than four intakes per week), an insurer will consider you a smoker and you will probably be able to qualify for standard rated life insurance with smoker rates (approximately double that of non-smoker rates). Example: A 35-year-old female who gets coverage of $200,000 in standard life insurance for smokers will pay $32 monthly for her policy.

Scenario #3: In both previous scenarios, an insurer will request medical tests, including urine and blood analysis. Should you decide to look for a policy that does not involve this test, you will need no medical life insurance (either simplified issue no medical life insurance or guaranteed issue life insurance). The simplified issue policy will still require you to answer some basic health questions. A guaranteed policy has no questions and no medical exam. In either case, simplified and guaranteed policies have higher premiums, as the insurer is assuming greater risk on your behalf. Example: A 35-year-old female non-smoker, who gets coverage of $200,000 with a no medical life insurance policy (simplified issue) will pay $49 monthly.

What’s the best way to choose a policy?

A life insurance broker sells the policies of every insurer in Canada, so your broker knows which underwriter is right for you. Not only can your broker find the best policy, he or she will also compare the prices on all of your options, ensuring you get the coverage you need at the best possible price. This is a free service for you. You only pay the insurance premium if you select, apply for and obtain a policy.

Lorne Marr is an insurance broker in Markham, Ont. 

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