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How to insure your pot-smoking client

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I love to work on my back porch where I have a glimpse of the Rocky Mountains, home to the honored distinction of being the first place in the country to legalize recreational marijuana use. I found myself pondering my place in the life insurance industry.

I am a licensed independent life insurance broker in Denver and I know there are plenty of marijuana users here in my backyard who want life insurance without being treated like a cigarette smoker. My personal views on marijuana use fall in line with a Novemember 2014 Gallop poll that states 51 percent of Americans believe pot should be legal. I believe, from a risk perspective, there is much less risk to insure a pot smoker vs. an alcohol user, but I am not an underwriter, physician, nor do I own a life insurance company. I do know that life insurance carriers are looking for reasons to rate our clients. Whether its via nicotine use or obesity, the insurance industry seems to have their finger on the pulse of society.

I do know that as a broker it is my job to serve my clients to my very best ability and it is my job to know which companies view pot use as less of a risk. And I am honored to share that information with you, my trusted colleagues, on this journey to insure the millions of uninsured.

I decided to do some research online and I first searched the phrase “life insurance marijuana” and what I found is that most are searching for details about life insurance exams and marijuana. It seems the consumer has spoken, just like many polls suggest that the majority of Americans now favor legalized marijuana and want to be able to insure themselves at affordable, non smoker rates. 

Twenty-three states and the District of Columbia have legalized Marijuana for medicinal purposes, so where does that leave the life insurance industry? How can a proposed insured be prescribed Marijuana and still qualify for preferred life insurance rates just like a prescription for a narcotic or some other widely used prescription drug.

If your clients do use marijuana, they are not alone. Marijuana is the third most popular drug in the world after alcohol and nicotine and in the U.S. moret than 10 percent use it daily while close to 40 percent of our population has tried pot at least once, according to a 2013 Gallop poll.

While knowing that much of society thinks marijuana is OK is comforting, the question on the minds of advisors and producers is, clearly, how can we insure our clients who do use marijuana and help with the best possible outcome? There is no question that there is a wide variety of opinion in the underwriting departments of the top U.S. life insurance companies these days. To think that a short decade ago, an underwriter would have declined all marijuana users. However, with a prescription today, if it helps him sleep, we are in business! While most carriers still consider a pot smoker the same as a cigarette smoker, there have been a handful of companies in recent years that have relaxed their perspective.

The key is understanding your clients’ current marijuana use and if it is prescribed by a physician. For example, I recently had a daily pot smoker prescribed marijuana for insomnia and Prudential Life gave him a preferred nonsmoker risk class. Other carriers, like Banner Life, would probably decline or highly rate this type of client. While it seems to be easy to possibly insure someone with a marijuana prescription, what about those who use it recreationally?

The top carriers I consider lenient (as of press time) with insuring marijuana smokers are:

  1. Prudential Life: If proposed insured is prescribed Marijuana for health reasons other than mental health then best rates are possible. If not prescribed and uses less than twice per month with negative THC test result, standard nonsmoker rates are possible.
  2. Met Life: If proposed insured uses four times or less per month, then they could secure a possible best offer and no rating. Proposed insured must test negative for THC. Daily use would be a minimum four table rating.
  3. Mutual of Omaha: Standard non-tobacco rates up to weekly use, if lab indicates more frequency, smoker rates will apply.
  4. Lincoln Life: Standard non-smoker rates up to two times per week. Two table rates for three to four times per week and decline for daily use.
  5. AIG: No rating for two times per year or less, other use will be rated as smoker.

Carriers that are not as lenient currently are Banner Life, Fidelity, Genworth, Reliastar, Protective and Transamerica.

As more consumers who use marijuana are shopping for life insurance, the industry and, specifically, the underwriting guidelines will have to take a look at how consumers use marijuana. There are plenty of options to consume pot without inhaling carcinogens from combustion of the plant itself. Most consumers assume marijuana is consumed by lighting a joint or smoking a bowl. However, there are other, non-smoking ways to ingest marijuana, such as:

  • Vaporizing: Today, consumers are using marijuana by vaporizing the plant and/or using the concentrated version without combusting the drug.
  • Edibles: Marijuana is not like your grandad’s reefer. Consuming marijuana could be in liquid or food form called an “edible.”

I agree with Prudential, a company that, in the past few years, started offering non-smoker rates for consumers who use an electronic cigarette but not a lit one. Well the same theory, in my opinion, should hold true for the pot smoker not lighting the pot but vaporizing it. What about the consumer who likes to eat the pot brownies instead of smoking the marijuana? I think they too are less of a risk than the guy smoking a doobie every weekend.

I also wonder how the insurance industry views someone using pot in my home state of Indiana, which is a big no no, versus the same proposed insured living in Washington State? Is there is less risk to the carrier for the resident of Washington State because marijuana is legal there?

I think, ultimately, this is an ever-changing underwriting category with all major life insurance carriers.  

There is no question that marijuana is widely used in our country and that most consumers who use it also want life insurance at affordable rates. Prior to the last decade, all pot users were classified as a cigarette smoker, whether the consumer used it once that year or daily, they were either rated as a smoker or outright declined. In 2015, however, there are companies that want the risk, that see the value of the segment and are willing to insure such clients. With proper understanding of the landscape, along with proper planning and underwriting, there is no reason the informed advisor can’t provide multiple options to a marijuana user looking for life insurance.