Drug Use And Insurance
Soft drugs, such as marijuana and hashish don't mix well with one another, nor with standard life assurance. Hard drugs, such as cocaine and heroin, make for an even tougher mix.
The prospects of getting standard life assurance vary between soft drug users and hard drug users and with exact history of use. They also alter between standard life assurance and critical illness insurance on the one hand, and simplified issue life insurance and assured issue life insurance on the other.
Simplified issue life insurance typically needs no medical tests, but up to 12 health questions. For instance, Sun Life Fiscal applications for traditional life assurance ask about use of soft drugs inside the previous five years but have less harsh interrogating for simplified insurance. Guaranteed issue plans have no health questions or health tests.
With conventional insurance, requirements also vary with the clients' age and coverage amount. Generally insurers require some mixture of spit, urine and blood tests beginning with clients in their mid-forties applying for coverage north of $100,000 or younger clients trying for $250,000 in coverage.
Understanding these differences has implications for the broker’s capability to obtain correct info for a cover letter, while not offending a potential client.
In the soft drug class, a marijuana user currently smoking on a regular basis will probably face a fall, while a smoker lighting up three to 5 times a week will face a rating. Someone lighting up on occasion at a Sat. night party or less frequently will pay the smoker’s premium, even if he or she doesn't smoke regular cigarettes. Most insurers ask about the subject's prior five year history with these substances.
In a quirky kind of insurance industry bargain, a tobacco smoker who also smokes marijuana occasionally does not pay any more than a ciggie smoker who never touches the weed. In another irony, medically sanctioned use of marijuana may attract increased rates since it points toward a serious medical infirmity.
The hard stuff
In the hard drug class, an individual who has used these substances within the 3 to 4 years before application faces an automated decline when making an application for traditional life assurance, no matter whether they are using it currently or recently, Marr announces. An insurer’s reluctance to insure a cocaine user is based on their significantly shortened survival expectation.
If the client used hard drugs more than 3 years before the application, she or he may face a rated offer. Dependent on the insurer, that would mean an increase of between 100% to 300% of the regular premium. A previous cocaine use who hasn't employed the drug for six years or longer may get the standard rate though that's not guaranteed. Sun Life for example, asks about hard drug taking over the prior ten years and dependent on the reply and actual details, the company might or might not offer life insurance.
Handling this sensitive topic increases the requirement for the broker to become a skilled questioner, causing delicate information without offending the customer. As an alternative, the broker can run through the questionnaire and then have the client read it, answer the questions and sign the form.
Dealing with a tough drug user leaves the broker with few choices, amongst them opting for a simplified issue product which might supply up to $50,000 in coverage at roughly double the regular premium. Some insurers providing this product don't ask drug-related questions. However , some ask whether the applicant has previously been declined for other sorts of insurance. A broker working with a hard drug user should bypass signing up for normal life assurance and go right to the simplified issue application, Marr suggests.
An alternative choice available to the broker is a preliminary inquiry containing a general outline of the customer including his or her history of soft or hard drug abuse but without naming the customer in particular and asking for an initial non-binding offer. The answer guides the broker whether to proceed with a formal application, Marr explains.
As with other issues, customer use of soft or hard drugs underscores the broker’s obligation to write as clear an introduction letter before submission to the underwriter.
Lorne Marr is Toronto life assurance broker. He specializes in affordable life insurance.
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