Marijuana Users Score Non-Smoker Rates with Canadian Life Insurance CompaniesSubmitted by MacDev Financial Group on August 25th, 2016
(Photo courtesy: Dank Depot/Flickr Creative Commons)
What are your thoughts on life insurance companies offering lower rates for marijuana smokers? Do you believe that life insurance companies should cover the cost of marijuana prescriptions?
Given widespread acceptance and use of marijuana combined with the government’s impending legalization of it, Canada’s big life insurance companies have recently reviewed and changed existing life and critical illness insurance product policies when it came to marijuana use. This moves comes as Canadian life insurance companies have watched American life insurance companies start to differentiate between the risks associated between smoking marijuana and smoking tobacco.
At the end of May 2016, Sun Life was the first life insurance company to announce it will now treat marijuana smokers (those who inhale or ingest) as non-smokers as long as they don’t also smoke tobacco. Shortly after Sun Life’s announcement, BMO Insurance, and Equitable Life jumped on the band wagon with similar changes to their policies.
Prior to these changes, Canada’s life insurance companies flagged marijuana users as high-risk, charging them the same rates as tobacco smokers (sometimes as high as 3x that of non-smokers). However, marijuana advocates suggest there is no scientific evidence that supports ingesting or inhaling marijuana carries the same long-term health risks associated with tobacco smoking.
“In our industry, we have to keep up to date with medical studies and companies update their underwriting guidelines accordingly,” Sun Life reported in a public-issued statement printed in the Financial Post. Both users of cannabis for recreational and medical purposes will now be able to receive lower premiums.
The Use of Medical Marijuana
While marijuana is now the world’s third most popular recreational drug according to a 2014 Global Drug Survey , the use of medical marijuana has also gained widespread acceptance perhaps pushing life insurance companies in a new direction to adjust rates for marijuana users.
According to Health Canada, 28,000 Canadians are actually federally licensed to possess the substance for medical reasons which is often seen as safer to use, with virtually no side-effects that pharmaceuticals often pose. In fact, studies and clinical trials have provided “sound evidence” that using marijuana is effective for the relief of nausea, vomiting, certain types of pain management, and the stimulation of appetite.
In order to hold a medical marijuana prescription patients are required to get a prescription from their family doctor or physician who set the daily dose required. Patients are then connected with a licensed producer.
More recently, Health Canada announced new regulations that will allow Canadians who have been authorized by their health care practitioner to register to grow their own marijuana or designate someone to produce it for them. Commercial growers have also been lobbying for life insurance companies to eventually cover the cost of marijuana prescriptions.
Marijuana: Less Risky Than Tobacco & Alcohol
Life insurance companies use a methodology called risk assessment to calculate premium rates for policy holders. This is often done using software that computes a predetermined algorithm that helps underwriters determine the risk of the policyholder actually filing a claim against their policy.
Underwriters take into account key indicators about you (do you smoke, drink, or have a poor driving record) and then measure those indicators against data set to weigh risk. The goal of underwriters is two-fold: protect both policyholders and the companies backing insurance policies.
When there is criteria that may increase the likelihood of a payout to the policyholder, an insurance company will increase premium payments. For example, tobacco smoking is considered a high risk behavior that may likely lead to hospitalization. As a result, health insurance companies will charge higher premiums because of the statistical outcome the policy owner will cost the insurance company money. It becomes a fine balancing act.
And when it comes to various legal and illegal substances, scientists have confirmed what earlier studies have shown: alcohol poses the highest risk while marijuana is the least risky. One study described in Scientific Reports revealed that at the individual level, alcohol presented the greatest risk of death, followed by nicotine, cocaine, and heroin.
However, when investigating risks associated to the population rather than just the individual, only alcohol was considered high-risk. The study used a new risk assessment technique called the “Margin of Exposure” (MOE) method. The technique looked at the ratio between the dose which characterizes adverse effects and the amount of a particular drug people typically use. The drugs assessed in the study were heroin, cannabis, nicotine, alcohol, methadone, amphetamine, and MDMA. Study results showed cannabis is around 114 times less deadly than alcohol and out of the all the drugs examined in the study, the one to pose a low risk of death. Therefore, for a low risk drug like marijuana, scientists of the study concluded a justifiable course of action would be regulation rather than prohibition.
Disclaimer: This information is given for informational or educational purposes only. All financial endeavors should be vetted through a financial professional; example, life insurance broker, financial planner, accountant, and/or lawyer, as the reader sees fit. MacDev Financial Group Corp, including but not limited to its agents, staff, associates and/or partners will not assume any liability for any information printed in this article; indirectly, or assumed.