Is cannabis use a red flag for insurers? Let’s break it down.
Cannabis and life insurance. Not exactly the power couple you dream of, but if you’re lighting up occasionally—or using it medicinally—you’ll want to understand what this means for your cover.
Whether it’s part of your weekend wind-down or something you’re prescribed for chronic pain, cannabis use gets flagged during life insurance applications. Not necessarily because insurers hate fun, but because the data behind it is murky. And that matters—a lot—when it comes to underwriting.
Let’s look at what actually happens when people disclose cannabis use on insurance pre-assessments in Australia. This blog breaks down how cannabis use affects your premiums, the types of exclusions you might face, and why it pays to be strategic (and honest) during the application process.
It’s not always a dealbreaker, but it will affect your premiums
We reviewed four recent cases of people who disclosed cannabis use during the life insurance pre-assessment process. Here's how it played out across major insurers in Australia.
What our data shows:
“The reason insurers don’t cover people who disclose recreational drug use is simple—they don’t have the data. So most likely, it’s a straight decline”
Why do insurers care?
It comes down to risk—and the lack of data.
Recreational drug use is still illegal in most of Australia, and because it’s under-researched, insurers don’t have enough data to create reliable risk profiles. That makes underwriters cautious. Some will decline outright. Others apply smoker rates or loadings.
Medicinal vs recreational cannabis: Is there a difference?
From an underwriting perspective? Not really.
Even if cannabis is legally prescribed, most insurers will still:
Apply smoker rates
Ask for delivery method and frequency
Require GP reports or documentation
Insurers aren’t trying to be difficult—they just don’t have enough long-term studies to confidently underwrite these cases.
According to the Department of Health, Disability and Ageing:
“There is currently limited clinical evidence on the efficacy and long-term effects of medicinal cannabis products.”
In Australia, medicinal cannabis refers to regulated, pharmaceutical-grade cannabis products that are prescribed by a doctor for specific health conditions. But even if it’s doctor-approved and legally prescribed, insurers still treat it with caution.
That’s because the medical community is still gathering robust, long-term data.
According to the Cancer Council, while medicinal cannabis may help with symptom relief in some cases, there’s currently:
No strong evidence that it treats or cures cancer
No proven effect in stopping tumour growth
No data confirming it reduces the risk of developing cancer
Sƒo even if you’re prescribed it for chronic pain, anxiety, or side effects from another condition, you’ll likely still be assessed under smoker rates or with added exclusions.
That means a cautious approach is the norm.
Insurers treat these differently, but even medicinal use doesn’t get a free pass. If you’re prescribed cannabis, underwriters still want to know:
Why you’re using it (e.g., chronic pain, anxiety)
How often
Whether it affects your ability to work
For recreational use, frequency matters. One-time experimentation is different from monthly or weekly patterns.
Common outcomes for cannabis users:
Standard cover with smoker rates (most common)
Additional loading on income protection (if frequency is higher)
Exclusions depending on health history
Declines for heavy or undisclosed drug use
What can you do to protect your cover?
Here’s what we recommend to all clients who disclose cannabis use:
1. Get a pre-assessment
That’s when your adviser anonymously sends your health and lifestyle details to multiple insurers to check how they’d treat your application.
It helps you avoid:
A formal decline on your record
Surprise loadings or exclusions
Getting stuck with the wrong insurer
2. Disclose everything—before the medical tests
Once something’s on your record, it has to be disclosed. But if you apply before a test or diagnosis, you’re assessed based on what’s known at that time.
“People are just not disclosing. And if they disclose, they get pinged for it.”
3. Ask the awkward questions
Not sure if your use qualifies as recreational or medical? Ask. That’s what we’re here for.
Too Long; Didn’t Read — What to remember
Insurers usually treat cannabis users as smokers
This means higher premiums, even for medicinal use
Some insurers are more flexible than others
Pre-assessment helps you avoid surprises
Being honest matters—but being informed matters more
Resources:
Cannabis and cancer treatment: Cancer Council Australia
Medicinal cannabis access in Australia: Department of Health, Disability, and Ageing
Drug policy stats and usage rates: Australian Institute of Health and Welfare
Got questions? Chat with an adviser before making a move. Especially if you’re in the cannabis grey zone.