Marijuana and Life Insurance Rates

For many years, the negative social stigma associated with cannabis products didn’t just influence the attitudes people had toward marijuana users. It also factored into the formulas insurance companies used when pricing their policies. This is because insurance companies set their rates by analyzing their customers in microscopic detail (they literally look at your pee) and assessing their likelihood of death. And historically, there’s been a widely accepted preconception that people who enjoy the occasional toke must have a lower life expectancy.

Marijuana smokers are no longer being penalized for usage

As marijuana use gets closer and closer to legalization in Canada, people are less likely to be shunning your weed brownies and more likely to be asking for the recipe (discreetly, of course). But that’s not all. Recent studies have shown no link between non-abusive intake of tetrahydrocannabinol or THC (a key compound in cannabis) and reduced life expectancy. And instead of burying their heads in the sand, Canadian insurance companies have taken notice.

So what’s changed?

Until a couple of years ago, insurance companies didn’t differentiate between marijuana and tobacco, treating users of both as “smokers” and charging them approximately double the price for coverage that they would charge non-smokers. So just like settling into a downward dog at the fancy yoga studio down the block, smoking weed was an expensive way to unwind after a stressful day. But now, insurance companies are delinking the two and giving marijuana smokers non-smoker rates. (Who’s got the upper hand now, Big Tobacco?)

Why are insurance companies willing to give you a break if weed is your substance of choice?

The key lies in what they consider to be a low-risk frequency of use. As long as your marijuana use isn’t abusive, which insurance companies define as smoking up to a few joints a week, you won’t be penalized. This is very different from how insurance companies view tobacco use. They’ll consider you to be a smoker if you’ve had any tobacco in the last 12 months. This means that smoking just one cigarette in the past year is enough to send your insurance premiums through the roof and to the moon. (We also think tobacco use penalties are absurdly high, and it’s one of the many standard industry practices we plan on fighting.)

So what’s the bottom line?

Your neighbour Helen may still turn her nose up at the first sign of a puff of smoke. But you can safely enjoy the occasional joint without being charged a higher price for life insurance.

Of course, it’s important to be completely truthful on your life insurance application when disclosing your cannabis use. If you lie and your medical exam shows that you’ve consumed cannabis, your insurance company will see this as a huge red flag. They won’t care that you enjoy getting high every now and then. (Who knows? They may do it too.) But if you’ve lied about your cannabis use, why should they believe that you’ve been honest about everything else on your application? And if they think you’re pulling a Pinocchio, they may make you undergo more intrusive medical tests, charge you higher premiums, or even decline your application altogether.

At PolicyMe, we’re here to help you uncover the largely unknown truths about the insurance industry. Our goal is to transform this antiquated industry into a transparent, customer-first environment where customers can make informed and cost-effective decisions without relying on the blind trust they’re typically forced to place in an advisor.

Laura McKay

COO & Co-Founder

About the Author

Laura brings 7 years of experience working in insurance & strategic operations as a management consultant at Oliver Wyman, after experiences at Manulife and Munich Re. In 2017, she launched a successful initiative for the World Economic Forum focused on innovation in insurance, working closely with insurers, tech pioneers, and policy-makers.

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