Life insurance companies can be like prudish acquaintances. Smoke cigarettes? For shame. Weight gain? Unfortunate. Deviations from perfection usually lead to higher life insurance prices when you buy a policy. But wait. Smoke pot? Shrug.
Not only can you qualify for life insurance as an occasional marijuana user, but you may get decent life insurance quotes.
Occasional marijuana use doesn’t count as “smoking” at almost a third of life insurance companies that have guidelines about rates for pot users — as long as they don’t also use nicotine products — according to an April 2015 survey of almost 150 underwriters by Munich American Reassurance Co.
How often you use marijuana does count, though. Heavy recreational use is generally counted as smoking, even at companies that take a more lenient attitude toward cannabis, and could even result in a denial with some insurers.
Life insurers getting hip to pot
The life insurance industry has lightened up on marijuana over the past decade or two, as have many states. Colorado, Oregon, Washington and the District of Columbia have legalized marijuana for recreational use. Medical marijuana is legal in 25 states.
A generation ago, marijuana users were often denied life insurance coverage, says Allen St. Pierre, executive director of NORML, a nonprofit in Washington, D.C., that advocates for marijuana legalization. Some people’s policies were canceled when they tried to increase their coverage and lab tests revealed marijuana use, he adds.
That has changed, and marijuana users generally are not automatically declined coverage today, although “they often are being asked to pay an enhanced premium,” St. Pierre says.
Qualifying as a nonsmoker
The key to getting low rates as an occasional marijuana user is to find a company that considers you a nonsmoker. Average life insurance rates for smokers are easily three times what they are for nonsmokers.
The rules for whether marijuana users qualify for smoker or nonsmoker rates vary among insurance companies and often depend on how much and why applicants use the drug, says independent insurance agent Jeff Root, founder of the Rootfin agency in Austin, Texas. Root researched underwriting rules at dozens of companies and found that:
- Marijuana users might qualify for the best life insurance rates if they have a prescription for medical marijuana. Rates will still depend on health of the applicant, including the condition the marijuana is prescribed to treat.
- Recreational pot users usually don’t qualify for the very best nonsmoker rates, but they can qualify for standard nonsmoking rates at some companies.
- Frequency of use matters. Most insurers will consider you a smoker if you use marijuana more than once a week.
Root assembled some examples of how companies rate marijuana users on his website. Here are examples of nonsmoker rates for occasional nonmedical marijuana use, according to Root:
- American General (AIG): Offers “preferred best” nonsmoker rates to applicants using marijuana two times a year or less, and standard nonsmoker rates for up to two times a month.
- Lincoln National: Offers standard nonsmoker rates for people who smoke pot up to two times a week and substandard nonsmoker rates for three to four times a week. Marijuana use four or more times a week will result in a denial.
- MetLife: Provides “preferred plus” nonsmoker rates for those who use marijuana less than once a week.
- Prudential: Offers “standard plus” nonsmoker rates for applicants who use pot up to two times per month and have a negative lab result for marijuana. Substandard nonsmoker rates are offered for people who use pot up to four times a week. You’re declined for coverage if you use marijuana more than four times per week.
Some life insurance companies foggy on marijuana rules
Some life insurance companies are still determining how to treat marijuana users. Among the insurance underwriters who were surveyed by Munich American Reassurance Co., one in five said their companies did not yet have an official underwriting policy for marijuana. Of those:
- 29% said their employers would develop guidelines in the next 12 months.
- 42% said it would take two to three years.
- 26% said rules probably wouldn’t be complete for at least three years.
More than a third of all the underwriters surveyed (36%) said they believe marijuana users are nonsmokers, and 49% said they believe there is no difference in risk between a marijuana user who smokes the drug and one who ingests it through “edibles.” But 43% thought that smoking marijuana was riskier than ingesting it, and 8% viewed ingesting marijuana as riskier.
Life insurance guidelines for marijuana users will continue to evolve.
“Despite a legalization movement across the country, scientific studies on the long-term effects of marijuana use are mixed,” Bill Moore, Munich American’s vice president of underwriting and medical, said in a press statement. “As a result, the life insurance industry is left with more questions than answers, making it crucial for companies to manage risk appropriately.”
How to find the best life insurance rates
Follow these tips to get coverage at the best price if you’re a marijuana user:
- Work with a good independent agent who can steer you to companies that are more marijuana-friendly.
- Be upfront about your marijuana use. Life insurance medical exams typically include blood and urine tests that will reveal pot use. If you lie about use, and a lab test reveals the drug in your system, the insurer likely will deny your application for coverage, Root says.
- Send a cover letter explaining the marijuana use with your application. Not all life insurance applications ask about marijuana, Root says. For his clients who use marijuana, he includes a cover letter explaining why and how often the applicant uses the drug.
- Compare life insurance quotes among insurers.
Finally, if you need life insurance, don’t let marijuana use prevent you from applying for coverage. You may qualify for better rates than you expected.
Barbara Marquand is a staff writer at NerdWallet, a personal finance website. Email: firstname.lastname@example.org. Twitter: @barbaramarquand.
Image via iStock.