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Underwriting Mary Jane

This blog post was written with the assistance of Paula Halperin, Senior Brokerage Underwriter, Zenith Marketing Group. Any opinions expressed in this article are solely those of the authors and in no way reflect upon the opinions of Zenith Marketing Group. Information expressed herein is not meant to provide specific legal or financial advice.

Pot. Reefer. Weed. Marijuana.

Love it or hate it (and despite what you may call it), the legalization of marijuana is a hot-button issue on a variety of levels. Regardless of whether the issues are political, social, moral, or legal, marijuana legalization has seen a large upswing of support in the past several years,  and it is becoming so mainstream that it’s become an issue that life insurance underwriters are being forced to address on an almost daily basis. Not only do we now have entire states that have legalized the recreational use of marijuana, but underwriters are also seeing clients who have legal prescriptions for marijuana as well. So what do these changes really mean for you and your fellow insurance professionals?

Let’s get some quick facts up on the board.

  • Marijuana is officially categorized as a Schedule I controlled substance by the federal government – having “a high potential for abuse” and “no currently accepted medical use in treatment in the United States”. (1)
  • Support for marijuana legalization is growing – Currently 54% of Americans say marijuana should be legal – meaning that more of your clients may be affected.
  • Almost half of Americans say they have tried marijuana at some point – This means that most likely almost half of your clients have as well. (2)
  • Two states (Colorado and Washington) have already legalized marijuana use – 15 more have decriminalized possession under certain amounts, and 20 states (and Washington, D.C.) have medical marijuana laws currently in place. (3)

Like it or not, it’s clear that society’s stance (and perhaps your clients’ as well!) on marijuana use is changing.

Luckily for your clients, marijuana usage is not viewed as harshly as many other recreational drugs in an underwriter’s eyes – clients who test positive for drugs such as cocaine would receive a straight decline. Marijuana users commonly receive tobacco-user rates; not the end of the world, but significantly more expensive than the premiums of a non-smoker. However, many carriers do still place a stigma on marijuana use due to its illegality in the eyes of the federal government. Although marijuana is one of the most common recreational drugs, there have been comparatively few studies on its effect on mortality (a key consideration in life insurance underwriting). (4) However, the implications of marijuana use go much deeper – applicants who have disclosed that they use marijuana may be opening doors for underwriting inquiries into their criminal history, other recreational drug usage, and even their mental health. As intimidating as this may sound, the good news is that it is entirely possible for clients to disclose their marijuana use and still receive competitive life insurance offers.

The first thing to get out of the way is the most obvious – SOME life insurance companies already screen for marijuana usageJust as we were told when we were kids, and also when it comes to applying for life insurance, honesty really is the best policy! Not only will this eliminate any nasty surprises down the road, but it also helps you, as the agent, make a more intelligent choice on where to shop the case – which saves you time and possible headaches later on. For those that deal with more privacy-minded clients, or those clients who may be understandably skittish about the legal ramifications of disclosing marijuana use, fear not; federal HIPAA regulations protect a client’s medical records from any unauthorized disclosures.

Each insurance carrier views marijuana usage slightly differently, so there are no true hard and fast rules when applying. However, one of the key considerations to be aware of is frequency of use – for instance, one carrier may make an offer of standard non-smoker based on “infrequent” use of twice a month, whereas another carrier would provide the same rating based upon their definition of “infrequent” use of twice per week. Additionally, carriers may take other issues into account, such as:

  • Whether the marijuana use is medicinal or recreational – if medicinal, what symptoms was it prescribed for?
  • How the marijuana is consumed – is it smoked? Vaporized? Ingested?

Also consider the fact that more and more insurance companies are actively re-evaluating their stances on marijuana usage; in fact, there are some carriers currently out there that have made offers of Preferred Best for applicants who use marijuana regularly.

This is exactly why it pays to have the experts on your side. Our experts at Zenith keep us up-to-date with changes in the industry, and being aware of these changes frequently makes the difference between an offer or a decline. Whether it be marijuana usage or other sensitive underwriting issues, Zenith has the expertise to get you the offers you’re looking for. Give us a call today with your tough cases, and see the difference for yourself.

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