How Your Life Insurance Policy Will Change if You Use Legalized Marijuana

Over 28 states have now legalized marijuana in some form.

That means one in every five Americans can now use marijuana legally, without the consent of a physician.

However, even though more Americans are able to lawfully use the drug, we're finding some unexpected obstacles associated with legal marijuana use.

One of those obstacles is life insurance.

You see, life insurance carriers will test urine and sometimes blood. The check will reveal marijuana usage - whether it's legal in your state or not.

And once the insurance carrier has that information, it can be used in myriad ways.

Here's a look at some of the biggest issues related to pot and life insurance right now...

How Insurance Companies Treat Legalized Marijuana

Most insurance companies do not differentiate between legal marijuana use and smoking tobacco.

"Carriers tend to view both activities the same way, but they can differ from one another in how they treat these activities," said Steve Kobrin, an independent life insurance broker who specializes in high-risk policies, to Investopedia on Mar. 29.

Additionally, a number of factors may impact how insurance companies treat legal marijuana use. Frequency and dosage, how the marijuana is used, and applicant's age may be considered.

Will Marijuana Use Change Your Premium Price?

If your policy considers legalized marijuana use the same as tobacco use, you could see your rates go up.

On average, tobacco smokers -- and now marijuana smokers -- will typically pay 100% to 300% higher rates than a non-smoker for the same policy.

To put that into context, a non-smoker would pay $52 per month and a smoker would pay $289 a month, according to recent data from Protective.

However, in some cases, you could avoid being labeled as a "smoker" because there are some carriers who distinguish between smoking, ingesting, or vaporizing.

"How you get the drug in your system could result in a price break," said Kobrin. "The difference could be as significant as being rated a non-smoker as opposed to a smoker."

But in some states, pot users question whether they should disclose their activities at all...

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What Happens if Pot Is Not Legal in Your State

If you live in one of the 21 states that does not have legalized marijuana, you are still protected by privacy regulations with your life insurance carrier. Here is the verbiage that is typical among most carrier contracts, according to Investopedia:

In other words, while you may be uncomfortable with acknowledging pot use if it is not legal in your state, you won't be penalized for doing so.

Can I Obtain Life Insurance to Cover My Legal Marijuana Business?

Life insurance is important for funding, key person coverage, business loan protection, and many other business needs.

Special Report: Cannabis Is The Gold Rush of the 21st Century - 30 Stocks to Invest in Now

Life insurance carriers don't usually take on the responsibility of determining the legality of any applicant's business. However, "I have not come across a domestic company yet who would offer a policy to somebody in this business, probably because they are still waiting for legalization," said Kobrin.

"Just like alcohol and tobacco use, a history of using marijuana can affect your access to life insurance, but as times have changed, so has the life insurance industry," according to Kobrin.

But perhaps instead of starting your own legal marijuana business, you'd rather get in on the profits by investing in one...

How to Invest in Legalized Marijuana

Most investors recognize that marijuana has enormous profit potential.

In fact, marijuana is now a $6.7 billion industry in North America. By 2020, experts predict the legal marijuana market will top $35 billion.

And as more states vote on marijuana legalization, we think investors should familiarize themselves with the leading players in the industry.
We've created a legal cannabis investing guide exclusively for Money Morning members. Packed with more than 30 great companies to buy, it's fast becoming "the weed investor's bible."

As an investor, you don't want to miss this.

Click here to get your free member copy now.

For more marijuana industry updates, follow Money Morning on Twitter @moneymorning, Facebook, and LinkedIn.

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