Life Insurance and medical cannabis: What you need to know

Life insurance is a meaningful investment, and is taken out to protect and provide for your loved ones after you pass away. In the UK, 35% of residents currently have life insurance, and in 2021 98% of claims were paid out in full. However, on occasion payouts are withheld, and this can happen for a number of reasons. 

In this article, we will explore the importance of keeping insurance policies up to date, and being completely honest with policy providers to ensure your efforts are not in vain. Keeping up with monthly premiums to take care of your loved ones after you die is a testament to your dedication, and the harsh lottery of health can trample these efforts in an instance. 

Here we will provide you with the information you need to clarify whether the use of cannabis based medicines, or medicinal cannabis, will impact the monthly premiums you will be offered, or the payouts you are entitled to, so that you can continue to protect the people that you love. 

So, how does life insurance work?

Every person’s life insurance policy is tailored to them as an individual, depending on their specific situation. Their overall health, medical conditions, use of medications or treatment plans, and lifestyle choices, all factor into the overall coverage offered to a person, and that affects the monthly premiums they will have to pay to ensure this coverage. 

In the UK, there are different types of life cover, or life insurance plans, so that individuals can choose what they feel is appropriate for them. Although most take out life cover, or enrol on an over-50 plan, other options include term insurance, which lasts for a set period of time, and Critical Illness Cover which provides cover when dealing with a specific medical condition. Life insurance can be taken out by the individual, as a family plan, and some employers even offer group life cover to their employees.

One of the most common plans taken out in the UK are Guaranteed Life Plans, or over-50 plans. These ‘guarantee’ a tax-free lump sum is issued to your beneficiaries when you pass away, to help cover funeral costs, pay any outstanding debts, or leave financial security for your family.

This type of cover is often issued without medical examinations or underwriting, but typically includes a moratorium clause, which usually lasts a year or two and excludes cover for specific risks, such as a pre-existing health condition. This means if you were to pass away from a medical condition that isn’t covered during this period of time, a payout would not be issued in the event of your death. 

These plans are less invasive and easier to enrol on, but often come with higher monthly premiums attached. It’s also imperative to read the small print, because, as previously mentioned, there are a number of exemption clauses included as standard in life insurance policies. 

How is life insurance calculated?

Typically, life insurance applications ask for your personal information, your name, date of birth, and assigned sex at birth. Your height and weight will be calculated to estimate your BMI which factors into the cost-equation, as do lifestyle factors such as your smoker status, rate of exercise, alcohol consumption, or participation in dangerous hobbies and/or occupations. 

Some plans ask for a record of your medical history, including any past surgeries, or health diagnoses, medications or treatments that you have, or are currently taking. In some cases a medical exam is required, involving urine and blood tests, to get a full assessment of your overall health. 

Each of these aspects, from what size jeans you wear and what hobbies you participate in, to what type of medications you take to treat which health conditions, have their own individual score or “price tag” in the eyes of insurers. 

And, with each of these aspects being specific to the individuals, insurance providers produce different premiums and payouts from person to person. 

On some plans, improvements in health or lifestyle choices may decrease the monthly premiums you are charged, but deteriorations in these areas could lead to more expensive policies. Regardless of these price fluctuations, it is important to update your insurers as and when things change if this is part of your policy, to ensure it adequately reflects your needs. 

Why are 2% of life insurance payouts refused?

In 2021, only 2% of the life insurance claims filed were refused payouts. Although this is a low statistic - it had a major impact on the lives of the individuals involved. 

Because some policies come with a ‘time limit’ or cover period, if the policyholder outlives this period of time, and fails to renew their insurance, payment will not be issued. Along this vein, if the policyholder passes away during the probationary or moratorium period included in their policy, or misses their monthly premium payments, their payout would be withheld in certain instances. 

In 2021, the most common reason life insurance claims were rejected was due to non-disclosure clauses, meaning they did not inform their insurer of something from the outset that would have affected their cover entitlement, or prices - making their policy void. 

Life insurance policies always state their exemption clauses clearly, and one clause that is commonly included could be detrimental to some medical cannabis patients. This clause states that if drugs are found in a person’s system after they pass away, their payment will not be issued. However, in the case of medicinal cannabis, if you are administering the correct products, as advised by your clinician, this will be evident during this examination. 

So long as you have ensured this clause is altered on behalf of your medicinal cannabis patient status, or does not apply because your use of cannabis has been recommended by a qualified healthcare professional, and your insurer is aware of this - it should not be a problem. But, if you fail to inform them of this, and fail to take these vital steps, the consequences could be devastating. 

Can medical cannabis affect life insurance policies?

Because each of the aforementioned individual aspects are relevant to the pricing strategy of life insurance equations, it is hard to provide a sweeping classification of how much cannabis-based medicines would also influence these decisions.

For a start, cannabis-based treatments can be prescribed for a large range of conditions. They are also used in different strengths and concentrations to manage different symptoms,come in different forms, and are administered in a variety of ways. On top of this, cannabis-based products are used at different dosages and frequencies by different patients – so, as a treatment option, it in itself presents a lot of variables. 

Writing for Online Money Advisor, Pete Mugleston MD, explained that ‘active’ drug users are sometimes accepted by insurance companies, but are typically charged higher monthly premiums. Those presently using drugs, or who have declared drug use in the past, often receive plans that include a clause excluding payout in the event of a drug-related death, or if drugs were found in their system after they die. 

“Some insurers are fairly lenient when it comes to cannabis use, and recognise that it seldom damages the user's health any more than smoking cigarettes, so a policy may be offered on standard smoker’s terms. And since it has been legalised for medicinal purposes in the UK, insurers may be even more tolerant. But again, this all depends on your individual situation and of course the providers' stance on drug use.”

However, smoking cannabis in the UK is illegal, regardless of a person’s prescription status. Medical cannabis should not be administered in this way, and is not prescribed to be consumed in this way. 

Cannabis flowers can be prescribed to be vaporised, which involves convection heating – not combustion, and so many feel it is unfair to penalise medical cannabis patients in this way. 

Some patients who vaporise cannabis are not smokers, and never have been. Other patients consume cannabis-based products sublingually, apply them topically, or ingest them in capsule or edible form, and so categorising them in the same way as smokers would be inaccurate. 

Looking deeper into the policy summaries from popular insurance providers in the UK that are available online, it also appears many providers include a payout exemption clause that relates to drug use. In some cases funds will not be released if death occurs from taking drugs or alcohol, although some insurers do state that this does not apply to drugs that have been prescribed by a registered doctor in the UK. 

Insights from Pure Cover: Life insurance for medical cannabis patients in the UK

To clarify as much as possible, I spoke with Alex Bradbury, Executive Advisor for Pure Cover. Pure Cover is a UK based insurance intermediary, that helps its customers save time and money by finding them the best, bespoke insurance policy using their network of brokers.

The Pure Cover team compare and contrast the policies and premiums offered by all major insurance companies in the UK, on a case-by-case basis for each customer as an individual, to find them the most appropriate plan. 

Alex assured me that at Pure Cover, patients using cannabis-based medicines, or taking medicinal cannabis “are not treated differently to any other customer, as their use of cannabis is medicinal and not drug abuse.”

“During the application stage, our standard question set asks individuals if they have consumed cannabis in the last year. If they answer yes, we go on to ask if their doctor has recommended this treatment and if they hold a valid prescription for it. If so, we then ask what condition this medicine is used to treat, and how it is consumed and dosed by the individual.” 

“the questions that we ask in relation to cannabis are to establish why it is being taken. Some insurers will even accept you if you are taking cannabis for recreational purposes, but having this information helps evidence there is a medicinal reason for its consumption and a doctor believes it to be in their best interest.”

Once this information has been collected, Pure Cover shop around to find the best policy or plan for each of their customers. The team navigate these variables, analysing smoker status’ policies and protocols and pricing discrepancies for different types of medicine, to sift through the small print and find the best policy for each person - whilst they sit back and relax. 

Although these elements can impact price points - Alex assured us their customers have the final say, and can approve or adjust their answers when taking out their policy. To get a quote from Pure Cover, customers fill out their online form here and select a date and time that is convenient to receive a callback. An insurance advisor will then be in touch to discuss their options and take them through the application stage. 

What medical cannabis patients can do to protect their policy

To ensure your actions and investment serves as intended, it is essential to keep your policy up to date with the information that is relevant and accurate to your current situation. 

Be completely transparent and honest with your insurance provider about your lifestyle choices, daily habits, and routines. Some policies need to be updated with new medical information as and when things change, such as starting a new treatment plan, receiving a new diagnosis, or if the severity of your symptoms changes - so make sure you read the small print. 

If you are unsure of how to answer any questions during your application process, speak to your prescribing doctor. They will be able to provide you with information that is relevant to your specific case and can confirm any questions you may have about your medical history or previous treatment types. 

If your case is particularly complicated, perhaps a letter from your prescribing clinician would be a helpful addition to any new life insurance policy applications, or even to submit and keep on file with your current policy provider. 

Updating your policy is an act of responsibility and care, and demonstrates that you have taken every precaution to ensure the commitment you have made is honoured once you have passed. Keeping up with payments for what in some cases can be many decades, may be null and void if you fail to read the small print.

One phone call to your policy provider, or simply switching provider if they will not accommodate your treatment of choice, could secure the future you have been planning for your family, and the generations to come. 

Ask the questions now, to get the answers you need. It will give you peace of mind, and your family financial security. 

It is possible to have full life insurance coverage as a medical cannabis patient in the UK, depending on your health condition, so long as you’re upfront, honest, and advocate for yourself. Remember, read the small print, and ask the uncomfortable questions. It will be worth it. 

Releaf understands that embarking on your medical cannabis journey can be overwhelming, and even slightly intimidating – that’s why we offer tailored monthly packages, specialist consultations for medical cannabis, and our unique medical cannabis card to give you the peace of mind that your treatment is protected, all based on your medical cannabis prescription.