How will smoking cigarettes or marijuana affect the cost of your life insurance?

BY ANDREW STEWART

Hello again and welcome to another edition of “ Insurance Matters” where I look to answer and talk about the most common questions and issues in the life and health insurance business. Today’s question is one I get pretty often. “How much more will I pay if I smoke cigarettes or marijuana”? With cannabis now being legal in Canada and the lack of evidence of it causing any type of cancer illness such as smoking tobacco, it’s a fair question to consider and ask. Do the insurance companies penalize those who smoke marijuana for medicinal and leisure purposes in their pricing of life insurance?

Regardless of your moral opinion about the legalization of marijuana, in my opinion marijuana was grouped into the insurance smoking class unfairly. Everyone knows the health concerns and deaths that smoking tobacco and nicotine cause. A Conference Board of Canada study published found that smoking causes more than 45,000 deaths in Canada annually, almost 1 in 5 of all deaths (18.4%) in the country. With marijuana those scary numbers don’t exist.

Most people are aware that if you smoke cigarettes, it doesn’t matter how many per day, the insurance company will put you in a smoker classification. Your premiums are determined by two broad classes, smoker or non-smoker. Even if you smoke one cigarette a week or a pack a day, you’re considered a smoker. The only way to escape being put into this class is to not have smoked cigarettes for at least 12 months. When it comes to marijuana some insurance companies are taking a much more open approach. Some companies have moved their smoker status underwriting towards how much that person smokes in a given time frame and some have removed it entirely from its smoker classification.

Now that you know what puts you into a smoker risk class, it doesn’t necessarily mean you’re going to pay double what a non-smoker would pay for the same coverage. There are two sub-smoker risk classes, preferred smoker and standard smoker. Remember I said this has nothing to do with how many cigarettes you smoke. Preferred or standard smoking rating is determined on how healthy you are. So you could be an extremely healthy one pack a day smoker and get a preferred rating or be a one pack a month smoker with a health condition or lifestyle risk factor and be placed in the standard smoker rating.

In order to qualify for a preferred smoker rating applicants need to meet certain criteria. Every insurance company has their own rules, but as an example, preferred ratings are only available on policies with face amounts of $500,000 or more. Why? Because normally the $500,000 threshold is when the insurance company would request  medical underwriting by checking your vitals, pulling fluids and measuring your height and weight. Face amounts below $500,000 usually only offer two risk classes standard non-smoker and standard smoker.

As an example, to qualify as a preferred smoker, you would need to be between 41-50 years of age and meet the following criteria.

• Blood Pressure: 140/85
• Cholesterol: 230/5.5
• No personal health history of: cancer, diabetes, cardiovascular disease, coronary artery disease, or stroke
• Family health: No family history of heart disease, cancer, or stroke prior to age 63
• Driving history: No impaired driving infractions in the last 5 years

If you meet all of the above, you would get a preferred rating. Qualifying for preferred smoker status would save you quite a few dollars each month as well. Monthly price differentials for a male and female aged 36 applying for $600,000 of coverage in a Term 20 with a known Canadian insurance company would be:

• Term 20 Male – smoker $115.96 | preferred smoker $78.56 | difference $37.40
• Term 20 Female – smoker $83.72 | preferred smoker $61.72 | difference $22.00

So, if you have been putting of obtaining coverage, speak to a licensed advisor and find out for sure how much it will cost.