Life insurers coming around on legalized marijuana?

In the past few years, a number of states have either decriminalized or legalized marijuana use for medicinal or recreational purposes. However, it should be noted that these states technically do so in defiance of federal law, which still prohibits use or possession of the drug. Nonetheless, many industries operating in states where these new rules have been passed are trying to adapt to the new environment, with varying effectiveness.

One sector that is still grappling with the legal and liability implications is the life insurance industry, according to a report from Above The Law, a legal news site. Right now, it seems that most life insurance companies still treat their clients who use marijuana like they do those who smoke or drink heavily: Their policies come with significant costs because they consider these people to be a greater risk. This is true regardless of whether that person's state of residence has legalized or decriminalized pot for any reason.

Legalized pot is a reality in a small but growing number of states.

Why is that the case?
The fact of the matter is that these companies don't have a good handle on how to assess risk from marijuana use as it relates to life coverage, regardless of legality, the report said. While some insurers are “marijuana-friendly” to people living in states where the prohibition on use has been lifted in some way, most are still likely to continue charging more for people who use it. In fact, in many cases that will be true even if they have a plausible medical reason to do so, with a prescription from a legitimate doctor.

For instance, in states with medical marijuana, a life insurer may look at whether the person with a pot prescription has a criminal record, and weigh that into their premium decisions accordingly, the report said. And even beyond that, the amount of marijuana they smoke could also disqualify them from getting better rates, because their insurers could still see them as using it recreationally in addition to their legitimate medical needs.

What comes next?
However, it should be noted that medical and fully legalized marijuana may become an issue in the ongoing presidential races, and national laws could therefore change within the next year or two, depending upon who gets elected, the report said. For instance, while it's not a plank of his major policy platform, Democratic candidate Bernie Sanders has repeatedly called for the full legalization of marijuana as part of an overhaul of the nation's drug enforcement.

This is therefore something life insurers may need to monitor closely as time goes on. Not only because federal attitudes toward marijuana may change, but more states might move to legalize or decriminalize the drug in the next few years as well, even if there is no federal action during that time. The more they can do to prepare for what many consider to be eventualities, the better off both they and their clients are likely to be moving forward.