Does your insurer care about your cannabis use? The short answer is yes – but it’s a little more complicated than that. The insurance industry is historically perceptive. Analysing all possible risk factors is an essential step in the insurance process. This helps insurance providers avoid losing money to high-risk customers.
Marijuana was previously viewed as a high-risk factor, but with widespread legalization and a complete shift in the way the general public perceives and uses the plant, insurers have realized something important. In order to stay competitive and keep their policyholders, they need to reduce the impact that cannabis use has on their premiums.
Here’s what you can expect from your insurer as a cannabis user.
How Cannabis Affects Your Premiums
In order to calculate an appropriate premium, insurers take a range of factors into account. This can include your age, medical conditions, diet, lifestyle choices, and family history. Of course, certain factors such as tobacco use can drastically increase your premiums. But with marijuana, things are still in a bit of a grey zone.
Life insurance companies in Canada don’t know how to treat cannabis users now that it’s legal, but some insurers are implementing their own rules. For instance, most life insurers now allow policyholders to smoke two joints per week, while others allow four joints or the equivalent in edibles.
But there are other factors that come into play here. If you have depression, anxiety or similar mental health issues, your premiums are likely to increase if you’re also a cannabis user. If you face an impaired driving charge while high, it’s likely that you’ll see an impact on your premiums.
How Different Types of Life Insurance are Impacted
The two most commonly used types of life insurance in Canada are “term” and “permanent.” The latter is, of course, designed to provide a payout to the family members of a policyholder when they pass away. Term life insurance covers policyholders for a set time period, with initially lower rates that increase as you get older.
So, how are these different types of life insurance impacted? At the moment, there isn’t really a clear answer. However, we do know that the more stringent a policy is, the stricter it’ll be on factors such as cannabis use. This is most evident with a fully underwritten policy.
With this type of policy, a blood and urine sample are usually required, and marijuana use is typically limited to twice per week. With a simplified issue policy, on the other hand, requirements aren’t as stringent, and you’re allowed to use more cannabis per week. However, premiums tend to be higher.
What to Expect Looking Forward
It’s clear that cannabis is here to stay, so what are insurance companies going to do about it moving forward? For now, all we know for sure is that they’ll become more reliant on data to determine premiums for cannabis users.
By factoring in more information about your lifestyle, insurers will be able to provide rates that are tailored specifically to you. Only time will tell whether this will have a positive or negative effect on premiums.