If you’re reading this article, there’s a good chance you have abused alcohol or drugs in the past and want to know how it affects your life insurance application. And since most life insurance applications have questions about current and past alcohol and drug abuse, you’re smart in wanting to be prepared.
The most important thing to know when it comes to drugs and life insurance is that a lot of it depends on your individual situation and health condition. This is true for every life insurance policy, but it's especially true if you've used drugs in the past.
If you are currently using addictive drugs, you will be denied. For most life insurance companies, you will need to be out of rehab for a certain number of years before even being considered.
If you are a former addict, there are five things you should know about life insurance policies.
1. Expect a lot of questions about your drug use
In order for the insurance company to know how much to charge you, they’re going to ask you a few questions about your past. Not every insurance company asks all of these questions, but this is a good list of what to expect:
What’s the name(s) of the drug you’ve used?
What form(s) of it did you administer?
How much did you use?
How long did you do drugs?
If you went to rehab, how long were you there? How many times did you have to go?
Were you ever hospitalized because of your addiction?
Did you relapse? If so, how many times?
Do you now have medical issues (cancer, heart disease, HIV, etc.) because of your drug use?
What is your current situation? Are you employed? Do you have a place to stay?
Are you in a healthy relationship and/or surrounded by healthy, supportive friends and family?
How long have you been clean?
To break it down even further, here are more things to note depending on your specific drug use:
Alcohol — The most lenient life insurance carrier will require that you're at least two years out of rehab before they consider your application.
Tobacco (cigarettes, chew, cigars) — Expect to pay three times more than nonsmokers. Because of the high amount of lethal diseases associated with tobacco use, your tobacco use is very high-risk in the eyes of insurance companies. And although e-cigarettes are all the rage, most insurance companies still consider them cigarettes and will charge you the smoking rate because they contain tobacco. Most insurance companies require you to be at least two years tobacco-free before placing you in the "preferred" category (more on that later). One exception: cigars. Carriers are typically more lenient about cigars, especially if you smoke less than twelve per year.
Marijuana — Even though marijuana use is decriminalized in many states, and is considered by most scientists to be less harmful than cigarettes, some life insurance companies still view it negatively. But it really depends on which life insurance company you’re interested in – some are more lenient than others – and how often you’re smoking weed. If you smoke every day, you’re probably going to be denied. If you’re using pot with a prescription (i.e. medical marijuana), there’s a chance you may be slapped with higher rates. Why? Because your marijuana has been prescribed to you to treat a medical condition. If that condition is deemed serious, you may be perceived as high-risk and be charged higher premiums.
Other drugs (cocaine, meth, heroin, opioids, etc.) — If you’re currently using, expect an automatic denial. You are too high-risk if you’re currently addicted to drugs. That includes painkillers that have not been prescribed by a doctor. With addictive drugs, most insurance companies require that your last stint in rehab or use of the drug was over three years ago before they will consider covering you.
2. Be honest about your past
If you deliberately withhold information on your life insurance application that you reasonably could've known, there's a possibility that your life insurance company would move to rescind (a.k.a. cancel) your life insurance policy. This isn't going to happen out of the blue someday – there is a process for it, and you'll be able to contest their accusation.
What counts as something that you "reasonably could've known?" If you smoked marijuana once or twice in high school, but are now in your mid-thirties, it's reasonable that you forgot that. On the other hand, if you were checked into rehab five years for drug abuse and forget to mention it on your application, it's a lot less reasonable that you forgot that.
If you're concerned that the life insurance company is going to report your drug use to the police or that they'll tell your employer, don't be – your medical information is protected by HIPAA, and the life insurance company will not be able to share your medical information without your permission.
Worse comes to worst, you pay a high premium now and as more time passes (between now and your last drug use), you can request a new medical exam — usually on the one year anniversary of your policy — and try to get a lower rate. You can also try your chances with a new company a few years down the line.
3. Be familiar with life insurance classifications
When it comes to life insurance, there are typically four classifications: Preferred Plus, Preferred, Standard Plus, and Standard. (Although each insurance company varies in what they call the classifications, this is generally what you’ll see.) To place you in a classification, insurance companies will consider things like height, age, weight, medications you take, drug and alcohol abuse, lifestyle, and family history. Sometimes, a former addict can be placed in Preferred if he’s been completely clean and sober for years – anywhere between 10 and 15 years, depending on the carrier.
In addition to the four classifications, there is also a Substandard category for people with complex medical situations, chronic or severe health issues, and alarming family health history. Substandard premiums are the most expensive.
4. Know that there are other options
If you think a term life insurance policy will be impossible to qualify for, consider a simplified issue or guaranteed issue life insurance policy. They allow you to bypass the medical exam. However, buyer beware: These policies generally cost way more than traditional life insurance policies and usually have a lower coverage amount.
Even if you think you won't qualify for term life insurance, you should still apply. It's free to apply, and you may find out that you can get affordable rates for the coverage you need.
5. Shop around for the best insurance rate
When it comes to finding the best rate, use an independent agent, especially one that is familiar with and specializes in procuring insurance for former addicts and high-risk cases. Independent agents can help shoppers compare quotes from multiple companies and also know the ins and outs of underwriting so they can help you pick the best option.
Image: Danny Kim