For those of us who’ve been around the insurance block a time or two, we can certainly remember the days when any type of marijuana use was an automatic decline. Today, the answer isn’t so cut and dry.
Marijuana usage is a hot and evolving topic in life insurance underwriting right now. As of today, 23 states and the District of Columbia have legalized marijuana in some form – Colorado, Washington, Delaware and Alaska have legalized recreational use while the others permit medical use only.
With the sudden interest in the news and other states considering legalization, Ash Brokerage has received numerous questions regarding our carrier partners’ underwriting practices for applicants who currently use, or have a history of using, marijuana. We’ve also received inquiries about business insurance for marijuana dispensaries and farms.
The good news is many of Ash’s carrier partners will entertain offers for life insurance on both an occasional recreational user and an applicant using marijuana for medical impairments.
For recreational marijuana, the underwriting class is influenced by the age of the insured and frequency of use, which is categorized as:
Carriers largely show preference to middle-age or older users (40+), with some having auto-decline parameters, such as under the age of 21.
From one carrier to the next, there is a large disparity when it comes to usage. Select carriers allow weekly use of up to four events at best class non-smoker, while others would impose a low substandard rating on their smoker rates. At this time, the majority treat recreational use as a smoker. As the frequency increases, the rate class increases, with some carriers declining daily usage or applicants using more than four times per week.
When considering offers and the underwriting class for recreational users, another important factor is co-morbid risk, such as: poly-substance abuse, respiratory issues, mood and psychiatric disorders, criminal history or avocations. In most of these cases, an application for life insurance will not be considered, will incur a higher rate class or be issued with exclusions.
When considering the risk for applicants using medicinal marijuana, most carriers will base the rate class on the underlying cause predicating the use of marijuana as treatment. The underwriting offers will range from best class non-tobacco to decline, depending on the underlying impairment, as well as the control of the disorder. A handful of carriers will add a substandard class of Table 4, regardless of the control of the illness or condition for which the marijuana is being used.
Some carriers consider all medicinal users as tobacco users, regardless of the form in which the marijuana is delivered into the system: smoked, vapor, eaten, drunk; others will differentiate between smoked/vapor inhalation or ingested/topical forms.
The same co-morbid risk factors noted above for recreational use are also considered when underwriting the applicant using medical marijuana. Again, most cases are not considered good risk and the majority will not be offered life insurance.
Our research shows that carriers will want to see a copy of the valid prescription card, or they will order the client’s attending physician records. Of the 25 carriers we surveyed, only six disclosed they routinely screen for marijuana, while the majority will reflex order for cause.
As of the time of publication, the federal government doesn’t consider marijuana dispensaries or farms growing marijuana crops legal businesses. The majority of smaller dispensaries typically are cash-only, which raises the risk for illegal actions such as money laundering. As such, most of the major life insurance carriers will not offer business insurance for marijuana dispensaries or farms, and some carriers won’t even offer personal insurance for applicants who are employed by such businesses. Only a few carriers will consider these businesses on a case-by-case basis.
First of all, we need to raise awareness to clear the haze created by the increased social acceptance of marijuana use. Also, full disclosure is imperative! Many carriers will decline to make an offer if the application and exam state “no use,” but then through their underwriting process, they find out the applicant is currently using marijuana for any reason.
Since there are so many variables influencing the underwriting decision for both recreational and medical marijuana users, it’s impossible for us to recommend a carrier for consideration without having all of the facts. The good news is at Ash Brokerage, you have a dedicated staff of seasoned underwriters available to answer your questions regarding marijuana usage and assist you with carrier recommendations. We’d welcome the opportunity to talk with you about your client’s specific needs.
Additionally, the Ash Brokerage website has numerous impairment questionnaires, including a marijuana questionnaire, which are useful in developing medical, financial or avocation risk. They’ll help you uncover potential issues – prior to collecting a formal application – and ensure the call with your Ash underwriter is productive.
I have to say, women are much better planners than men. Could you imagine if it were up to us men to make plans for a vacation? The clothes would be shoved in the suitcases and out the door we’d go … only to reach the destination and realize we forgot our toothbrushes.
I know I’m thankful for all my wife does. She cooks for us, shops for us, and helps keep us all healthy. Without her, I’m sure we’d have bologna and hot dogs in the fridge … and probably not much else.
Well, when it comes to getting our finances in order, the same holds somewhat true. I’m talking about more than just balancing the checkbook and making sure the bills get paid on time, however. I’m talking about making sure everything is in order so your family doesn’t have to go through any extra heartaches. Women are naturally better at this because they think about others before they think about themselves.
That’s where long-term care planning comes into play. Women just get it. They understand it has nothing to do with them, and everything to do with their family. No selfish decisions, no unnecessary risks. They are proactive about getting all of their ducks in a row.
Put It In Practice: We could all learn a thing or two from women in this respect. When we start looking at insurance solutions, let’s start thinking about the people in our lives who will be dealing with the consequences of our actions. It has nothing to do whether we may need long-term care, and everything to do with the impact that need would create.
So thank you to all the women who put others first. Without you, our lives would be a mess, and our toothbrushes would still be at home.
The financial stresses that keep me up at night are what I assume keep most women up at night – household expenses, debt and retirement. Thankfully, I’ve taken steps throughout my life to lessen those worries over time.
When I was 17, I bought my first car, a Ford Thunderbird. Growing up in a family of 10 meant money was always tight, however, and my parents couldn’t afford car insurance for a 17-year-old. So, I purchased my first insurance policy, automobile insurance. Oh how I hated paying that premium every month, but loved the freedom a car gave me!
A few years later, I purchased my first life insurance policy. It was a simplified issue policy that only required me to check “no” for a few questions. It wasn’t a big policy at all – a $20,000 benefit with a rider to double the benefit if I died as a result of an accident. But it gave me peace of mind knowing if something happened to me, my parents and younger siblings would not be burdened financially.
Around this same time, I also starting working for a company that offered a retirement savings plan, called a 401(k). I knew if I saved 3 percent of my own money, the company would match that 3percent. Who doesn’t love free money?! As my earning power started to grow, I began contributing additional funds.
Fast forward to getting married … after a five-year engagement, I never thought that day would come, but it did. What was I going to do protect my husband in case something unexpectedly happened to me? What if something happened to both of us? Who was going to take care of our beloved dogs? Did we want everything tied up in our estate to create a court battle between families? No, not at all! We had wills drafted that stated our intentions and named family members as executors of the estate. We also made sure our contingent beneficiaries matched the intentions in the will.
Do I still lay awake in bed worrying about stuff? Yes! But not every dollar and cent because I know I have created a great foundation to continue building my financial dreams.
Put It In Practice: August is #FinancialFinesse month. Take the time to help guide the next generation of women on how to make sensible financial decisions throughout their lives.
The 1950s “Leave it to Beaver” family life isn’t the norm for the 21st century family today. The breadwinner of the family isn’t always the husband … and the caregiver isn’t always the wife. Even though we see this every day, we don’t always remember it when looking at clients’ financial plans for their families.
If June were the breadwinner, how would she keep the Cleaver family running if something happened to her? How would they pay the bills? How would they put food on the table? How would they pay for child care or house cleaning if Ward needed to go back to work?
There are so many things we take for granted today that could be gone tomorrow. While we can never know when an unexpected event will occur, we can be prepared for the potential financial impacts – no matter our gender.
A strong disability policy would be just one of many solutions June would need to consider. If she became hurt or sick, the policy would replace her paycheck and help with any extra medical bills. This alone could create a level of peace and comfort to shift the focus away from her physical distress and help her get back to her good ol’ self in no time.
Put It In Practice: No matter a person’s role or financial contribution to their family, what they provide is invaluable. Help them prepare for an unexpected event and its potential impact.
If your clients had investment income in 2014, there may be something in their recently filed tax return they weren’t expecting – an additional tax. For individual taxpayers with an adjusted gross income of more than $200,000, or joint filing taxpayers with adjusted gross income of more than $250,000, the Patient Protection and Affordable Care Act created an additional tax of 3.8 percent on investment income, effective after Dec. 31, 2012.
The tax is levied on the lesser of:
Investment income specifically includes gross income from interest, dividends, annuities, royalties and rents. Investment income does not include distributions from qualified retirement plans, IRAs, gains on the sale of certain business interests, active trade or business income, or any income taken into account for self-employment tax purposes.
Considering this new surtax on investment income and the additional tax burdens placed on high wage earners contained in the American Taxpayer Relief Act of 2012, it has become increasingly important to consider taxation when making investment and financial decisions. The sticker shock individuals are experiencing after reviewing their 2013 tax returns has resulted in an increased interest in tax-favorable strategies, such as maximizing qualified plan contributions, implementing non-qualified deferred compensation plans or contributing to charitable remainder trusts. Additionally, there has been an increased interest in taking advantage of the tax-favorable nature of cash value life insurance.
Put it in Practice: The cash values inside life insurance policies grow on a tax-deferred basis and, when designed correctly, may be withdrawn free of income taxes. The new 3.8% surtax discussed above does not apply to life insurance cash values – make sure your clients know about this advantage.
© 2018 Ash Brokerage LLC.