As marijuana legalization spreads, how will it affect life insurance?

Over the past few years, a number of states across the country have moved to legalize or reduce the criminal penalties for marijuana use and possession, and that trend is likely to continue for some time to come. However, this can also significantly affect issues like life insurance rates, as habitual pot use could affect a person's overall health.

Insurers across both the health and life sectors have recently grappled with how they will handle clients whose habits now include legalized marijuana, and as more states make the move, it becomes a bigger issue for all involved, according to a report from the marijuana-related news site Merry Jane. One of the biggest issues for insurers isn't necessarily how to handle the cannabis side of marijuana use, insofar as its effects don't much impact life insurers' concerns. However, THC or Tetrahydrocannabinol (the active chemical in cannabis) almost certainly would.

As marijuana legalization gains momentum, life insurers may be in a sticky situation.

Why could THC affect life insurance premiums?
THC is an issue for people who smoke marijuana, specifically, and some insurers are now choosing to categorize smoking it in much the same way they do for people who smoke tobacco, the report said. That, in turn, means that marijuana smokers will likely have to pay far more for their life insurance coverage. Another potential issue here relates to people who have been prescribed medical marijuana by a doctor, because the conditions typically associated with such a directive may likewise be of concern to life insurers in general, and can drive up premiums long-term.

As a consequence of these issues, it's vital that life insurers make sure consumers know why they're asking about or testing for cannabis use overall, the report said. Honesty truly is the best policy in this regard, on both sides of the table, because users who try to conceal their habits but eventually get found out can see their policies canceled.

The changing status
One state that recently decided to legalize marijuana is Massachusetts, and the new laws about it went into effect in mid-December, according to the Boston Globe. But that leaves the Bay State in a bit of a “gray zone” because it will not actually be legal to sell marijuana within its borders until the start of 2018. As a consequence, that means possession and use is legal, but sale is not. That, too, may create some awkward situations for life insurers going forward, because there is not much oversight for cannabis within the state at this time.

“People who want to use marijuana are going to have to get it from the same sources they were getting it from before Dec. 15,” Jim Borghesani, one of the leaders of the successful effort to remove prohibition from state law, told the newspaper. “The gray zone is not ideal, but there's really no other way around it.”

During the one-year gray zone period, it is vital for life insurers to reach out to clients and let them know how these issues affect their coverage, if at all. Meanwhile, it's important for insurers to likewise craft comprehensive plans for how to handle similar legalization efforts nationwide.