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Underwriting Reefer Madness

These are the ways marijuana use can impact your clients’ insurance premiums.

Several years ago, our life insurance brokerage firm underwrote a very prominent attorney for a large term policy who proudly admitted, during his medical exam, to smoking marijuana once, every year, at his alma mater’s collective marijuana annual party called the “Hash Bash.” The carrier underwriter called me immediately to discuss our options and to let me know that his best offer would be to consider the client as a smoker, effectively doubling the premium. “Why can’t he lie, like the rest of us!?” he proclaimed. While I can’t speak for this particular underwriter, the use of marijuana, both medicinally and recreationally, has clearly increased. Cannabis consumption is seemingly more common, if not accepted. However, when applying for life insurance, there are several issues that you and the client should be aware of, prior to underwriting the policy. To what carrier the case is shopped is of utmost importance when considering the product and needs of the client.

There are two major underwriting considerations when marijuana use comes into play. The first major consideration is the type of use: either medicinal or recreational. The second is the frequency of the consumption. 

Medicinal Use

When the use is medicinal, a client could potentially be considered a “Preferred Plus Non Smoker,” if any other underlying condition wouldn’t preclude the insured from being in this category. Typically, the client could be considered a “Non Smoker” or “Smoker,” depending on each carrier’s standards and client admission. Again, any additional underlying condition could also impact any underwriting decision. 

Recreational Use

When the use is for recreation, each life insurance company underwrites somewhat differently, and much of it regards frequency. The terminology is a bit vague with descriptors such as “rare,” “intermittent,” “common” or “occasional frequency” being used to describe a client’s regularity of use. Each carrier specifically defines this nomenclature ranging from one to two times of use per year to multiple times per week. In general, the less the stated use, the better the offers will be. Ranges of offers from carriers can be from “Preferred Best Non Tobacco” to an outright decline for daily users. Some additional considerations are the age of the client, the use of other controlled substances, such as Opioids, and other alcohol or drug abuse history.

Reasonable Solutions

This topic can be a very sensitive subject for many different reasons. We recently worked with an advisor who needed to pursue coverage on several business owners for a pending corporate buy-sell agreement. The company wanted $10 million of life insurance on each of the owners. One owner was a recreational user of marijuana and didn’t want anyone at the company to know this information. His reluctance to share this personal part of his life could have jeopardized certain parts of the overall business plan. Fortunately, he was able to be direct and discreet with the advisor, who was able to place the most favorable offer, without his personal information being shared with his company.

In another case that we recently underwrote, a female insured was in need of a very significant amount of guaranteed permanent coverage for estate-planning purposes, but also had several serious medical conditions. Although we were ultimately able to provide the coverage that she and her advisors wanted her to obtain, she was initially very reluctant to apply for insurance and share information with her family about her medical use of marijuana. As the exam, her medical records and additional information were kept confidential, she was able to avoid any judgement from her siblings and family.

Unfortunately, I believe that significant plans are lacking in the life insurance needed as a result of the clients’ unwillingness to share this very personal information. They may also fail to plan as a result of their assumption that coverage is simply unavailable to them.

We do live in quickly changing times, when things like marijuana were considered taboo just a few years ago. Today, it’s hard to make a compelling argument against its effective medical use. While the use and abuse of recreational cannabis has grown, it’s more commonly viewed with mixed emotions. Some people are still strongly opposed to its use, and some are completely accepting. It is good to know, however, that people who need life insurance and partake in marijuana can often find competitive coverage.

It’s our job as advisors to know our client and be aware of this trending topic in life insurance underwriting. It’s also good to know that we often have a reasonable solution for our client.


Glenn M. Barnes, CLU, is a Regional Vice President with Plus Financial Network, an AimcoR Company. He is also a Partner with Life Insurance Nerds, a life insurance industry advisory firm.

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