"First of all, WTF": Man denied life insurance because he did shrooms once
There are certain factors that may affect how much you pay for life insurance.
Age, sex, lifestyle, overall health, and medical history are just some characteristics that insurance companies look at.
For example, if you smoke or vape, your insurance premium will most likely be higher than those who don’t.
But how about being denied life insurance altogether?
People are usually denied life insurance if they fall into a high-risk category, according to Life Happens, a non-profit organization that educates consumers on life insurance and related products.
This could include health challenges like diabetes and other diagnoses of serious diseases. But you can also fall into this category if you live life on the edge.
One 36-year-old man posted a story on the subreddit r/PersonalFinanceCanada about how taking shrooms one time cost him his critical illness and disability insurance.
He says his life insurance was up for renewal and he didn’t want to pay the high renewal rates, so he found and applied for a cheaper policy.
Life Insurance Application Denied Because I Did Mushrooms One Time
by u/WienerWraps in PersonalFinanceCanada
“I guess I was a little too honest because I noted that I had done mushrooms once on a camping trip in summer 2018,” the post reads.
“Flash to a few weeks later, the life insurance was approved, but the critical illness and disability were denied citing the illicit drug use.”
He says the insurance company would not reconsider his application until 2026. The Redditor was frustrated with the turn of events.
“First of all, WTF. I’m so annoyed. Doing this kind of drug once just doesn’t seem like a valid reason to deny someone,” he wrote.
“The agent told me there’s no recourse and I’ll just have to apply again in a few years as I can keep my current policy for now with no issue.”
The man received lots of unqualified advice from his fellow Redditors, so we decided to reach out and get some qualified advice from an expert.
First off, what is life insurance?
Before we get into the nitty gritty, let’s go back to basics. What really is life insurance and why would someone get it?
Jiten Puri, life insurance agent and CEO of PolicyAdvisor, says it’s essentially a financial safety net for a person’s family.
“In case an individual were to pass away, then the insurance company will provide a sum of money to the family or the beneficiaries and then they can use the funds as they may desire,” he explained.
“It’s a financial protection tool that allows you to provide a safety net to your family to help support any financial impact from the loss of life of the individual who’s insured.”
Can insurance providers deny someone for doing shrooms once?
Puri says that, generally speaking, the answer is yes.
Life insurance applications will always ask about substance usage, he says, whether that’s usage of prescribed or unprescribed narcotics like opiates, magic mushrooms, or hard drugs like heroin and cocaine.
“The life insurance decision is predicated on how insurable someone is, or the kind of risks that they produce or create in the future,” explained Puri.
“So, [insurance companies] look at lifestyle choices that individuals might make. Using substances that are still not legally permissible shows to them a certain level of risk-taking that insurance companies, of course, want to avoid.”
He adds that providers will also look at that person’s history of “risky” behaviours, which they could see as leading to medical fallout in the future.
“[Insurance companies] will use that to either increase the price of coverage or in many cases decline the coverage outright,” said Puri.
How about legal drugs like marijuana?
The Redditor also mentioned that the insurance company “didn’t seem to care” that he used cannabis frequently.
Puri says this is because marijuana is better understood now by insurance providers, especially since recreational use was legalized in 2018.
“Insurance companies have been much more pragmatic about it,” he explained. “The people that have used or are using marijuana are able to get coverage relatively easily.”
However, insurance companies do take into account the frequency and quantity of usage of cannabis.
Puri says that if you’re a heavy user who ingests marijuana seven days a week in high quantities, for example, then companies can increase your premium, or in some cases, decline your application.
Are there other options for frequent or one-time users of shrooms?
Puri says there are two types of life insurance coverage in Canada.
The first is your traditional insurance with companies (RBC, Manulife, Sunlife) that ask extensive questions about your medical history and lifestyle.
Having access to a lot of your information helps these companies provide better and higher coverage for cheaper, but that also means they can be more conservative, according to Puri.
“They have access to a larger prospective client base, so they can pick and choose and say, ‘Okay, this is the kind of risk we want to underwrite, this is the kind of risk we don’t want to underwrite,'” he explained.
The second type is non-medical or simplified life insurance. Puri says these companies are more accommodating, with less extensive medical screening.
“As they’re more accommodative, they tend to be able to absorb a higher degree of risk, so people will tend to qualify easier there,” he said. “But it comes at a higher price.”
He says that non-medical life insurance is usually double the price of the traditional, basic coverage.
Should you lie on your insurance application?
“Am I just an idiot for admitting I’ve done drugs?” asked the Redditor. “Do people just lie about drug use on these applications?”
Many replied to his post that if it’s a one-time or rare occasion, it’s okay to omit that fact.
Puri advises people not to do this. He says that your file will be cross-verified at the time of claims.
“What you want to be able to have is peace of mind,” he explained. “So, when you’re buying a 10-, 20-, 30-, 40-year policy, you want to be sure that you’ve provided information that should not or cannot get contested in the future.”
“The individual will not be able to defend why they answered a certain question a certain way because it’s life insurance, the claim will only happen after we pass away, and therefore it’s important to be accurate and honest about the disclosure,” he stressed.
Essentially, make sure your great-granddaughter won’t have to deal with the repercussions of you taking shrooms one time.