Since 2004, Canadians have been abusing illicit drugs less and less. This leaves many former users and addicts who will be looking for life insurance sometime.
Naturally, insurers do not really treat harsh recreational drug use very favourably. Ongoing cocaine, heroin or ecstasy use will result in a dismissal. This is because illicit drug experience is a pre-existing medical condition. Current drug users may still qualify for simplified issue life insurance policies. These policies have no medical tests as a pre-condition and usually do not ask the applicants any drug related medical questions.
This is how major life insurance companies look at cocaine, heroin and ecstasy:
- Present cocaine, heroin or ecstasy use will bring about an instant refusal.
- If the insured refrained from taking drugs more than four years ago, the resulting premium quote will probably result in a policy rating – that is to say if there are no other underlying health issues. A policy rating means that a qualified insured pays an extra premium due to the heightened risk to the insurance company. Ratings are customarily in multiples and can be anything from 50% to 400% on top of the original plan rate.
- Prior use from more than six years ago may qualify the client for standard premiums, i.e. without additional rating. Of course, this only holds if he or she is in good health otherwise and has no lifestyle issues as a consequence of the past addiction.
Lorne S. Marr, author, is an insurance specialist and an expert on hard-to-insure clients. Lorne works with over a dozen Canadian insurers, such as AXA Life Insurance or Standard Life Assurance.