MaryJane is not everyone’s choice, but for those who partake, are they punished by the insurance companies? Not necessarily.

KEY TAKEAWAYS

• Stigma, myth and reality
• What do the underwriters look at
• Compounding issues (mental health, DUI, other drug use)
• Back to earth… effects in the real world?

Marijuana will become more topical for New Zealand as we head towards the September referendum on the legalisation of cannabis use. This article is not to help you form an opinion on that, but to view the situation from your financial risk management.

Personal insurance policies, life insurance, trauma cover and the like all get assessed on application. What does the occasional toke mean for users and their personal protection plans?

There is a perception among the general public that all and any drug use is a no-go for insurance. It is true that many narcotics are woefully harmful to the mind, body and spirit. However, as with alcohol, which as a legal intoxicant is a useful indicator, there are obviously ‘grey areas’ where insurance underwriters may be comfortable with the health risks posed by use. We know that insurance companies do not look kindly on excessive alcohol consumption or smoking (including e-cigarettes and patches in some cases). But they will still accept some level of consumption.

What do the underwriters look at?

The underwriters have the unenviable task of balancing the needs of the client against the potential risk to the insurer. They will look at the prospective client’s application both as individual parts (conditions) and universally (how do the various conditions relate or affect others).

There are a few basic questions that they will ask to determine the severity of the condition.

• What is the condition?
• How long has the person had it (when was the diagnosis)?
• What diagnostics and treatment were used (if any)?
• Have symptoms stopped, if so for how long?
• Is there any expectation, or recommendation for, future treatment and diagnostics?

These questions form the basic assessment of most conditions that underwriters will address, when looking at a new application for insurance. Depending on how ‘complete’ the information supplied is, they will either decide here (say ‘yes’ or ‘no’) or request further details. The first place they go for more information is the GP’s notes for the client.

Back to our topic of marijuana use. There will be questions around how much and how often. Are other non-prescription drugs used, if so which and how often? Was the drug use due to a specific reason, such as depression?

It really is important to be honest with your adviser when you are making your application. Neither your financial adviser nor the insurance companies to whom you are applying will report you to the police for drug use. However, incomplete disclosure may have serious consequences at claim time. If you have not disclosed a known condition, your insurance company may decline your claim.

This is an important point too; what types of cover are being applied for? The underwriters have different threshold requirements for different products. For example, life insurance products do not typically attract as many questions as a monthly paying, income replacement benefit does, like income protection.

Compounding issues (mental health, DUI, other drug use)

As mentioned above, after each condition is assessed individually, then the applicant is viewed as a complete picture.

For example, with drug use, mental health and depression may play a factor. If so, that sets off another round of questions related to depression (how long, what treatment, date of last symptoms etc). Has there been a loss-of-driving conviction due to previous drug and alcohol use? Are there any other health factors that have been disclosed on the application that may provide a different view for the underwriter? For example, are other narcotics used recreationally? If so, then the applicant potentially has a history which could be viewed as unstable for certain insurance products.

Back to earth… effects in the real world?

So back to earth we gently descend. If someone is classed as a moderate recreational user (once a week for example) of marijuana, they can most likely get standard insurance cover, without extra price loading or conditions. However, as shown above, if other narcotics are (or have been) used, then that may change the decision. If there is a history of mental health problems, depression and a DUI charge, then things may get more complicated.

What this article should do is provide some reassurance that, just because someone has a condition or a makes certain life choices, that should not be excluded from cover. Insurance companies, believe or not, also live in the real world. If you can prove that you are not that risky to them, they will insure you.