Since the Constitutional Court of South Africa decriminalised use and private cultivation of cannabis (dagga) in September last year, there has been much discussion around the personal use of dagga and how it affects a long-term insurance claim.
Given the negative stigma that cannabis users have had over the last few decades, it is understandable that South Africans are afraid to disclose cannabis use to their insurers. However, when you enter into an agreement with an insurer, this is a contract based on confidential trust. Liberty encourages you, as the insured party, to be honest.
Don’t be afraid to disclose your cannabis use – It is legal after all
Dr Dominique Stott, Liberty’s Chief Medical Officer says, “At Liberty, we’ve placed a strong emphasis on ensuring that advisers and clients focus on providing true and accurate information during the underwriting process. This is a relationship built on honesty, trust and full disclosure, even when it comes to the use of cannabis. This is why we encourage advisers and clients to inform us of any medical or lifestyle events that would impact their application for a policy.”
The importance of full-disclosure should be a priority conversation that all advisers should be having with their clients when applying for insurance. Not only will it help to reduce the occurrence of non-disclosure claims, it will also ensure that clients receive their pay-outs when they need it most. Not telling the truth about their health on an application places the payment of a claim in jeopardy.
When it comes to using cannabis, your premiums are not necessarily loaded. Factors such as frequency, the amount you use and the purposes you use it for are all considered.
The benefits of full disclosure
- It reassures clients that their claims will be paid in accordance with the terms and conditions of the policy
- It ensures a fair and more affordable premium is charged
- It leads to faster underwriting and less medical requirements to speed up the application process
- It results in fewer requirements needed at claims stage and leads to less legal and client disputes
Three questions to clarify cannabis usage and insurance cover
- Will you repudiate a claim if I use cannabis but did not declare it on my application form?
Insurers have a responsibility to ensure that all valid claims are paid, but applicants have an equal responsibility to answer all questions truthfully. If non-disclosure is uncovered, and a positive cannabis history is detected this may lead to problems with payment of the claim.
- If I don’t smoke cannabis but I drink and eat it, will I pay smoker rates?
The short answer is yes, the policyholder will pay general smoker rates as well as rates linked to the risk of the hallucinogenic properties of the substance. This is why it is so important to disclose the usage of the substance at underwriting stage.
- If a claim is as a result of me being “stoned” will it be seen as illegal and claim declined?
If an illegal act is committed, we reserve our rights to decline the claim. Consuming cannabis in itself is not an illegal act, so claims will not be repudiated if the policyholder was simply using in their private capacity. Of course, this is only relevant if no illegal activity has been undertaken – e.g. driving while under the influence, causing an accident and injury resulting in a claim.
Dr Stott concludes, “If you are unsure of what to disclose, disclose it anyway and let the underwriters decide how this needs to be managed. If your financial adviser fills in the insurance application form for you, it is your responsibility to read through everything carefully before signing. You may also request a copy so that you can read it and keep a record of your disclosures. If you prefer to discuss your medical history directly with the Liberty Tele-underwriting team we have this facility available for clients to take advantage of. This allows all medical history to be disclosed fully and confidentially at your convenience.”