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Marijuana use affects your life insurance premiums, but each provider assesses it differently based on frequency and method of usage. Here’s how different companies treat recreational and medical marijuana use.
Patrick Hanzel, CFP®
Updated January 22, 2021|7 min read
TABLE OF CONTENTS
Marijuana is the most commonly used drug in the United States with 48.2 million consumers a year, according to the Substance Abuse and Mental Health Services Administration. Despite the drug’s popularity, life insurance companies are historically conservative, and many insurers are still cautious about marijuana use — both recreational and medicinal — regardless of state legalization. Some companies won’t take infrequent use into account, while others will assign you smoker rates (which can be two to three times more expensive than nonsmoker premiums, according to Policygenius quoting data in 2021) based on any amount of usage.
But like many factors in life insurance, each company has a slightly different approach, and your premium will depend on your frequency of use (and in some cases, whether you smoke or use another delivery system).
Some life insurance companies assign smoker rates to marijuana users
Smoker rates can be 2-3 times more expensive than nonsmoker rates
Your frequency of use and other factors influence how you’re rated
If you’re a medical user, it’s likely you’ll be rated based on the condition you’re treating
You can still get competitive coverage with several companies if you use marijuana (which we’ll explore more below), but as long as you don’t work or earn income in the marijuana industry, you can get almost immediate coverage with a Lincoln TermAccel policy. Marijuana smokers may see lower prices for more coverage with this type of policy than they would with other insurers. The policy is especially valuable to people who may not get an affordable no medical exam policy elsewhere
Lincoln TermAccel is a competitive policy for individuals in good health, so if you have a more complicated medical history, it may be harder to get approved for coverage. Policies are available to individuals 18-60, with some age restrictions for 30-year terms and smokers.
Lincoln TermAccel offers all the perks of a term life insurance policy — without an in-person medical exam for individuals 18-60. Instead, the insurer conducts a phone interview that is followed by a deep dive into your insurability via your prescription history, motor vehicle report, and medical history. Most of the time, this is enough information to warrant an application approval (or denial), but additional labs might be required if something in your background check is flagged as a risk.
The entire process takes about two to three days — compared to the usual wait time of four to six weeks for a traditional life insurance policy.
Lincoln TermAccel premiums are some of the lowest in the industry. According to Policygenius quoting data, here’s how much you can expect to pay with a Preferred health classification for a $500,000 policy:
Monthly premiums for women
|AGE||AVERAGE MONTHLY PREMIUMS|
Monthly premiums for men
|AGE||AVERAGE MONTHLY PREMIUMS|
Methodology: Rates are calculated for male and female nonsmokers with Preferred health ratings in Columbus, Ohio, obtaining a 20-year, $500,000 Lincoln TermAccel term life insurance policy. Quotes may vary by term, coverage amount, health class, and state. Not all policies are available in all states. Rate illustration valid as of 1/22/2021.
Each life insurance company determines premiums and health classifications on an individual basis. Based on Policygenius data in 2021, we recommend the following insurers for more favorable rates depending on how often you use marijuana.
Many life insurance companies view medical marijuana differently than recreational marijuana, and how they determine your health rating will depend largely on the health condition for which it’s been prescribed. Consult with a licensed independent agent to find the best provider for your condition.
There are insurers, however, that will rate you based on medicinal use. Those companies may offer you standard rates if you use less than 12 times per year or if the substance is not inhaled.
Carriers often view recreational marijuana fairly favorably, but if there are underlying health conditions it's a different story.
When you shop for life insurance, you’ll be assigned a health classification during the underwriting process based on your health status, hobbies, family medical history, and a few other factors. The worse the classification, the higher your premiums will be. The rating system ranges from Preferred Plus (best rates) to Substandard (worst rates):
Substandard classifications are also called table ratings , which are numbered or lettered (e.g. Table B, Table 4).
In addition to health classifications, life insurance companies use broader distinctions when determining rates: smoker (or tobacco) and nonsmoker (or non-tobacco). Some insurers grade marijuana users as tobacco smokers, leaving them eligible for smoker rates only (which can be two to three times more expensive than nonsmoker rates). Other life insurance companies will give nonsmoker rates and even their best rates to marijuana users, depending on the frequency of use.
"The main factor with marijuana is that recreational use is actually often looked at fairly favorably for a lot of carriers and most can offer non-tobacco rates,” Patrick Hanzel, Policygenius’ Advanced Planning Specialist and Certified Financial Planner explains, “but the underlying health conditions, if it’s prescribed to treat those, are the big differentiators.”
Not all life insurers differentiate between the different delivery systems for marijuana, but some will. The providers that do set them apart will often give you smoker/tobacco rates if you vape, while others might be more flexible about ingesting marijuana, depending on the frequency of and reasons for use.
Some providers, like AIG, will offer favorable rates to those who use CBD, but many companies don’t differentiate between CBD and THC during underwriting.
THC shows up in a blood test anywhere between three and 14 days after marijuana use and is detectable in urine for up to a month, depending on the frequency of use. Some companies will rate you more favorably if you admit to marijuana use but don’t test positive for THC during screening, so if you’re applying for life insurance, you may want to abstain for a month or so to ensure your urine is clean.
Even if there is currently no THC in your blood or urine, it’s important to be honest with the life insurance company about your marijuana use. Lying on a life insurance application is insurance fraud and it’s very likely the life insurance company will find out about your marijuana use anyway.
During underwriting, there’s a good chance that the underwriters will request your medical records, and your medical records will very likely have some mention of your marijuana use. If an insurance company finds evidence that you are a marijuana user and you haven’t disclosed your drug use, they can deny your application.
If a life insurance company finds out you’ve lied to them, they will also report you to the Medical Information Bureau,or MIB, which means that every life insurance company will know you lied on a life insurance application and could decline to cover you.
Should the insurer accept your application and find out you lied afterward, they can cancel your policy during the contestability period. Even worse, the provider could deny your family’s claim after you pass away, leaving them unprotected.
Compare and buy life insurance
Because marijuana is still illegal in the United States on a federal level, financial institutions and insurance companies face a lot of regulatory hurdles by insuring anyone who works in the marijuana industry. Many insurers will decline marijuana industry professionals, leaving thousands of industry employees without financial protection.
While a few smaller insurers are now beginning to offer coverage to cannabis industry businesses and employees, most midsize and large insurers are still declining because of the risk. For employees having a hard time finding private coverage, Morgan Fox, Media Relations Director at the National Cannabis Industry Association, suggests that the best immediate option is to encourage your employer to look hard for someone who will provide group coverage to the business.
Fox also cites legislation like the Secure And Fair Enforcement Banking Act of 2019, which would “protect financial services providers from federal interference or punishment if they decide to work with people in the industry,” which could encourage risk-averse insurers to begin changing their attitudes.
The two main factors in how marijuana use affects your life insurance are the frequency of use and whether your use is medicinal. Generally speaking, if you’re an infrequent, recreational user who doesn’t use e-cigarettes to smoke, affordable nonsmoker rates are likely available to you.
If you’re a frequent user, you might pay higher premiums and have fewer providers from which to choose, but you’ll probably be able to get covered. If you’re a medical marijuana user, most life insurers will rate you based on the condition you’re treating, so you should compare quotes to find out which provider will offer the most affordable premiums for your condition.
An insurance agent or broker can help you find the best policy based on the specifics of your marijuana usage, health, and finances. Above all, it’s important to be honest about your marijuana use during the entire application process — getting caught in a lie could cost you your coverage and cost your loved ones financial protection after you’re gone.
Yes, the life insurance paramedical exam tests your blood and urine for several items, including THC levels. If you opt for no medical exam life insurance, you’ll still be asked questions about marijuana use and underwriters can access past medical records to determine insurability.
If you use CBD oil (without THC) then it is unlikely to affect your life insurance premiums. However, if you use CBD to treat a specific medical condition, your rates may increase due to your health.
A blood test can detect THC between three and 14 days after marijuana use and a urine test can detect THC up to a month after use.