Marijuana Users Frequently Considered Non-Smokers By Life Insurers

Time was when most life insurers had no underwriting policy regarding an applicant’s use of marijuana. But that’s no longer the case.

According to a survey by Munich American Reassurance, 29 percent of life insurers with an underwriting policy in place classify marijuana users as non-smokers. The survey is based on on-site interviews of nearly 150 underwriters. They were attending the April annual meeting of the Association of Home Office Underwriters in Washington, D.C.

Of the life carriers represented in the survey, just one in five have no official underwriting policy in place for marijuana users, according to the Atlanta business unit of Munich Re.

However, 42 percent of those companies’ representatives said they expect their employers will have a policy in place within 12 to 36 months.

In addition, 29 percent said they believe it will take less than 12 months to develop such a policy, although 26 percent feel it will take more than 36 months.

In terms of views on assessing marijuana users, 36 percent of the underwriters said they believe marijuana users are non-smokers despite growing concerns around respiratory issues.

In general, a non-smoker classification results in lower life insurance rates than a smoker classification, though other underwriting factors impact the final cost to the customer too. Up until a few years ago, among carriers that wrote insurance on marijuana users, the rating of choice was often smoker, so the Munich American poll indicates new thinking and approaches are underway.

The poll also found that 43 percent of the underwriters said they believe frequency of use is the most important factor for underwriting marijuana users, Munich American said. That’s followed by the individual's medical history (37 percent), age (14 percent), and current state of health (6 percent).

"Despite a legalization movement across the country, scientific studies on the long term effects of marijuana use are mixed," Bill Moore said in a press release. He is vice president of underwriting and medical at Munich American.

"As a result, the life insurance industry is left with more questions than answers, making it crucial for companies to manage risk appropriately."

The life insurance industry’s historical approach to marijuana use has been to err on the side of caution, he added. That was due to the “uncertainty surrounding the drug."

Many life insurers in the past would classify casual marijuana users as smokers. A smoker classification will increase, often substantially, the premium the customer pays if approved for coverage, as compared with a non-smoker classification. Among concerns cited was the drug’s impact on the nervous system and other health factors as well as marijuana’s long-standing status as an illegal drug.

Some carriers denied (and still deny) coverage altogether to frequent marijuana users.

However, in 2012, Colorado and Oregon legalized marijuana, later followed by Alaska and Washington. Several other states now permit marijuana use for medicinal purposes. With the changing tide have come changing approaches to underwriting marijuana use by life insurance applicants.

A “significant number” of carriers no longer jump to classify marijuana users as smokers, said Moore in releasing the survey findings. “Instead, they are placing a strong emphasis on frequency of use and medical history to determine rates."

InsuranceNewsNet Editor-at-Large Linda Koco, MBA, specializes in life insurance, annuities and income planning. Linda can be reached at linda.koco@innfeedback.com.

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Linda Koco, MBA, is a contributing editor to InsuranceNewsNet, specializing in life insurance, annuities and income planning. Linda can be reached at linda.koco@innfeedback.com.