Life Insurance And Recreational Drugs
A 2009 survey shows that cocaine and crack are among the most used drugs by adults and teenagers, second only to cannabis.
Whereas cannabis was used by more than 10% of Canadians in 2009, cocaine and crack was used by about 1.2% people. Approximately 11% of Canadians tried out an illicit drug in the same period. These six drugs include heroin, ecstasy (MDMA), cocaine, speed, hallucinogens (excluding salvia), or cannabis. Drug use rate among women (7.6%) is about half that among men (14.7%) and is in turn three times higher among adolescents (27.3%), which is unfortunate.
Forbidden drug use has been reducing in Canada since 2004, creating plenty of addicts and former users who will need life insurance at some point.
You may have guessed that life insurance companies do not particularly fancy the use of cocaine or of other drugs. Current drug use will earn the applicant a direct refusal. This is due to the fact that illegal drug use is an unfavourable LINK1:pre-existing medical condition. Please note, however, that current drug users may have a chance with simplified issue insurance policies. This coverage is not contingent upon the results of medical tests and often does not ask drug related questions.
This is how major insurers regard cocaine, heroin and ecstasy:Current drug use will earn the applicant a direct refusal.If the insured stopped taking drugs over 4 years ago, the resulting quote will likely result in a policy rating – that is to say if there are no other underlying health issues. A policy rating is an extra expense on top of the traditional coverage price. It means for the applicant that he or she pays an additional premium premium on his or her policydue to the bigger risk to the insurer. Plan ratings are normally in multiples and can be anywhere from 1.5x to 5x theusual coverage cost.Prior use from over 6 years ago may qualify the insured for standard premiums (i.e. without policy rating). Of course, this only works if he or she is in good health and has no lifestyle issues as a result of the past addiction.We recommend speaking with an insurance adviser who has quality experience working with Canadian insurers on underwriting current or former drug users.
The author is an insurance specialist and an expert on hard-to-insure clients. He works with over a dozen Canadian insurers, such as Manulife financial life insurance and Sun life life insurance.
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