Yes, you can insure a drug user

Soft drugs, such as marijuana and hashish do not mix well with each other, nor with traditional life insurance. Hard drugs, such as cocaine and heroin, make for an even tougher combination.

The considerations go beyond definitions of legality and extend to the insurers’ risk management processes, explains LSM Insurance, one of the most renowned brokerages in Canada, with over 50 years of combined insurance experience.

The chances of obtaining traditional life insurance vary between soft drug users and hard drug users and with actual history of use. They also vary between traditional life insurance and critical illness insurance on the one hand, and simplified issue life insurance and guaranteed issue life insurance on the other.

Simplified issue life insurance typically requires no medical tests, but up to 12 health questions. For example, Sun Life Financial applications for traditional life insurance ask about usage of soft drugs within the past five years but have less stringent questioning for simplified insurance. Guaranteed issue plans have no health questions or medical tests.
With traditional insurance, requirements also vary with the client’s age and coverage amount. Typically, insurers require some combination of saliva, blood and urine tests starting with clients in their mid-forties applying for coverage upwards of $100,000 or younger clients applying for $250,000 in coverage.

Understanding these differences has implications for the broker’s ability to obtain accurate information for a cover letter, while not offending a potential client.

In the soft drug category, a marijuana user currently smoking on a daily basis will likely face a decline, while a smoker lighting up three to five times weekly will face a rating. Someone lighting up occasionally at a Saturday night party or less frequently will pay the smoker’s premium, even if he or she does not smoke regular cigarettes. Most insurers ask about the individual’s previous five year history with these substances.
In a quirky kind of insurance industry bargain, a tobacco smoker who also smokes marijuana occasionally does not pay any more than a cigarette smoker who never touches the weed. In another irony, medically sanctioned use of marijuana may actually attract increased rates since it points to a serious medical ailment.

The hard stuff

In the hard drug category, an individual who has used these substances within the three to four years before application faces an automatic decline when applying for traditional life insurance, regardless of whether they are using it currently or even recently. An insurer’s reluctance to insure a cocaine user is based on their significantly shortened life expectancy.

If the client used hard drugs more than three years before the application, he or she may face a rated offer. Depending on the insurer, that could mean an increase of between 100% to 300% of the regular premium. A former cocaine use who has not used the drug for six years or longer may get the standard rate although that is not assured. Sun Life for example, asks about hard drug use over the previous ten years and depending on the response and actual details, the company may or may not offer life insurance.

Handling this touchy topic increases the need for the broker to become a skilled questioner, eliciting sensitive information without offending the client. As an alternative, the broker can run through the questionnaire and then have the client read it, answer the questions and sign the form.
Coping with a hard drug user leaves the broker with few choices, amongst them opting for a simplified issue product which might provide up to $50,000 in coverage at about double the regular premium. Some insurers providing this product do not ask drug-related questions. However, some ask whether the applicant has previously been declined for other types of insurance. A broker working with a hard drug user should bypass applying for traditional life insurance and go directly to the simplified issue application, LSM professionals suggest.

Another option available to the broker is a preliminary inquiry containing a general description of the client including his or her history of soft or hard drug use but without naming the client specifically and asking for a preliminary non-binding offer. The answer guides the broker as to whether to proceed with a more formal application.
As with other issues, client use of soft or hard drugs underscores the broker’s obligation to write as clear a cover letter before submission to the underwriter.

“You want them to be able to make as good a decision as possible,” LSM Insurance Team says. As with other issues, guidelines vary between insurers, between underwriters at insurance companies and even the insurer’s aggressiveness in getting new business.

Filed by Al Emid, editor

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  • Don Cox
    December 30, 2013 at 10:18 am

    Thanks LSM Insurance, but don’t these policies underwrite at the time of death? I use methadone maintenance therapy which is a narcotic substitute. I heard that any narcotic use will immediately nulify any claim.

    • LSM Insurance
      December 30, 2013 at 6:11 pm

      Hi Don. You’re welcome. Simplified Issue plan have a series of questions – if you answer “no” you qaulify and if you answer “yes” you don’t.

      Many of these plans have a two year waiting period on non accidental deaths.

  • Don Cox
    December 20, 2013 at 3:12 pm

    Hi, I have an internet business. I want to get term life insurance. I have not used cocaine for 7 years. I am currently on MMT. Actually stuck on it. It’s a legally prescribed drug and getting off of it requires that I attend a clinic in Mexico that using Ibogaine, which costs about $20K for one week stay. I have contacted a local insurance agent in Canada and they told me that nobody will underwrite insurance for me. Another agent told me that some companies will, but the rates can be 300 percent more than standard rates.
    Can you offer any advice?

    • LSM Insurance
      December 28, 2013 at 8:22 pm

      Hi Don, You could qualify for a Simplified Issue Life Insurance policy. There are No medical tests and some health and/ or lifestyle questions with these plans. The more questions yyou can answer “no” the better the plan.

  • Dave
    November 7, 2013 at 10:27 pm

    My father is 62 years old and has a addiction to crack cocaine is there any life insurance that I will be able to insure for his grand kids ( my kids) when the obvious will happen and if so could u please name these places I live in vancouver bc

    • LSM Insurance
      November 8, 2013 at 9:43 am

      Hi Dave,

      He would qualify for a Guaranteed Issue (No Health questions and No Medical Tests) and certain Simplified Issue plans (No Medical Tests and Some Health Questions) but he would still have to complete and sign the application.

  • Just a
    June 13, 2013 at 9:04 pm

    Does the type of drug use matter?? There is a big difference between Marijuanna and Cocaine

    • LSM Insurance
      June 14, 2013 at 8:12 am

      Yes the type of drug use and amount of drug use would influence the type of policy the insured qualifies for and the premium he/she will pay.

  • Renee
    April 30, 2013 at 9:34 pm

    I use medical marijuana on a daily basis to treat adult ADD. This was the very best course for treatment that my doc and I could agree on- as I personally feel and studies show that the current medications used to treat adult ADD have far more dangerous health implications than marijuana. I would like to buy a life insurance policy worth anywhere from $250K – $500K…. those numbers are a guess unless you have a better suggestion. I’m am 40, single , apart from the ADD in excellent physical health, and have 3 children. What would be my monthly payment on such a policy? Thank you, Renee

    • LSM Insurance
      May 1, 2013 at 12:06 pm

      Hi Renee,

      Thanks for the note. It would depend on the type of plan and the amount of coverage. There would likely need to be a separate drug questionnaire that would need to be submitted with you application. Simplified Issue Life Insurance plans which have more limited questions and higher premiums may be a good option – many of these policies do not have a drug use question butthe coverage levels on these plans are more limited.

  • LSM Insurance
    August 14, 2011 at 10:05 pm

    Hi Steve,

    There a few companies that could be a good fit. Assumption, Canada Protection Plan and few other carriers offer simplified issues policies which do not have a drug related question.

  • Steve
    August 14, 2011 at 6:24 pm

    I was needing permanent insurance for soft drug user, 1 – 2 weekly, longterm user. Which is the most cost effective company if I am in late 50’s ?

    Thank you