Life Cover in the age of legal cannabis

No longer viewed as a counter-culture drug, cannabis has become as almost as mainstream as tramp stamps and craft beer. It’s already legalised for medicinal and recreational use in many countries, and in South Africa the authorities are taking their cues from the Constitutional Court’s landmark ruling decriminalising private use and cultivation.

Last week the world celebrated international day of cannabis consumption, observed by lighting up at about 4.20 pm local time. But while personal indulgence is a private matter, experts say it’s still viewed as risky behaviour – and life insurers are likely to load policies for cannabis users – or even deny them cover outright.

Jonathan Elcock, the chief executive of independent online life insurance comparison platform CompariSure, says the new legal position doesn’t mean cannabis use won’t affect potential life insurance claims, or the ability to get cover.

He says life insurers may refuse cover outright, if cannabis use is disclosed during the application process. “The reality is that South African life insurers by and large have yet to adapt the way they underwrite marijuana use. While private cannabis usage may now be legal, the known health risks associated with its use have not changed,” says Elcock.

Insurers’ reluctance to adapt their policies is not based in law, but on an actuarial standpoint. Dr Andrew Hutchison, associate professor in the University of Cape Town’s Department of Commercial Law, says: “Since the risks are largely health- and lifestyle-related, this has little to do with legality. The use of cannabis is therefore comparable to how the legal practice of other ‘risky’ activities, such as skydiving, also affect the general underwriting of risk.”

Long-term usage of cannabis smoking can cause respiratory and psychological illness, so insurers are also more likely to approve life cover than critical illness or disability cover, because they’re more nervous about the risk. Elcock notes cannabis has more chance of making you disabled than killing you.

Dr Maritha van der Walt, the convenor of the medical underwriting standing committee at the Association for Savings and Investment South Africa, says the insurance industry has taken cognisance of the cannabis judgment, but will still request information on the use of cannabis as part of the risk assessment of an insurance application – “as we do with alcohol and smoking”.

Companies are guided by the distinction between recreational and medicinal use: the latter is for serious conditions such as severe weight loss in HIV patients, nausea related to chemotherapy for cancer, and neurological conditions such as multiple sclerosis or neuropathic pain. “In these cases, the medical condition will be assessed according to the normal underwriting rules,” Van der Walt says.

Professor Sylvester Chima, the head of the programme of bio and research ethics and medical law at the University of KwaZulu-Natal, agrees: “While there is no overwhelming evidence available that smoking cannabis may impact on longevity, there is recent documented research evidence that smoking high-potency cannabis and daily use of such may be associated with psychosis, including paranoia and hallucinations, which may or may not be associated with suicidal ideation and paranoid or irrational behaviour.”

Chima says the current law does not specify concentrations of tetrahydrocannabino. “The only issue that can be specified or suggested is that underwriters enquire from prospective clients the quantity and frequency of cannabis use and make their estimations from that, similar to asking smokers whether they are heavy smokers, or people who use alcohol whether there are social drinkers, or whether they drink every day, and use this as a basis for their decision-making.”

To avoid policy loading, it might be tempting to not declare usage, but non-disclosure is dicey, too. Matt Kloos, the co-founder and chief financial officer of CompariSure, says consumers need to be careful about non-disclosure.

“You don’t want your family to have a policy declined. The risk for the consumer is that they think it is legal and it won’t affect you down the line. As always, full disclosure is required to give the insurance company the opportunity to assess the risk and eliminate complications should there be a claim.”