We typically write 20-30 term life policies annually for business owners and other high-net worth individuals, often as part of a buy-sell agreement or key person policy for our small business clients. Our general agency partner gives us access to a medical underwriting director with 25 years of experience, enabling us to match the right carrier with our client-specific needs and health/family history.
One new wrinkle is the legalization of recreational marijuana in California in 2018. How does a life insurance company looks at marijuana use? Here are a few examples from our medical underwriter:
Ex 1: 39 year old male, admits to smoking an occasional marijuana cigarette once a month. Urine specimen is negative for THC. All other underwriting criteria are standard or better. Case will likely be STANDARD (or better).
Ex 2: 28 year old male, does NOT admit to marijuana use on his application or insurance exam. Urine specimen is positive for THC. All other underwriting criteria are standard or better. Case will likely be RATED or DECLINED.
Ex 3: 54 year old male, history of chronic back pain controlled with medical marijuana obtained by prescription. No physical limitations and employed full time. No disability or extended time off from work. No other underwriting concerns. Case could be STANDARD or RATED.
(putting some jargon into understandable terms):
“Standard” = not great (3rd or 4th best risk class) = more expensive.
“Rated” = a LOT more expensive.
“Declined” = might get Standard or Rated sometime in the future, (but maybe not).
If you are thinking about taking advantage of one of California’s new “green businesses,” you may want to consider first locking in a 20- or 30-year term life policy. Once in place, you will then be truly free to choose whether to use.