How Does Your Job Affect Your Life Insurance Rates: Why A Dangerous Job Gives You Higher Rates
Your life insurance rate is determined by many factors. While insurance companies mainly look at age and health, your job also plays a part in what you’re charged.
In this guide, we’ll cover the reasons why your job may influence your insurance rate. We’ll also discuss work hazards that can increase your premiums, and what you can do to secure lower premiums even if you have a high-risk occupation.
Why Jobs Influence Your Life Insurance Rates
Your life insurance premiums are determined by how risky you are to insure. Your risk is determined in a process called underwriting, which takes into account your health status, family health history, and age, among several other factors. In addition to those, one other factor that determines your risk to the insurer is your career.
Generally, your life insurance rate will be higher if the life insurance company sees you as more likely to die within your life policy term. If you work in dangerous jobs, your chance of premature death is higher than the average individual. This makes you especially risky in the eyes of insurance carriers. Because you pose a larger risk to the insurance carrier, you’ll be charged higher life insurance premiums.
Understanding Life Insurance Classification
Life insurance companies classify you into one of several risk categories, and your category determines your premiums. While insurers may use different names and have varying underwriting guidelines, they typically have five categories, ranging from Preferred Plus to Substandard.
Generally, working in hazardous jobs will disqualify you from the top two categories. This means you’re likely to be offered a higher rate than those with excellent health and less-dangerous jobs.
Depending on your occupation and your insurer, you may also be charged extra fees for your life insurance coverage. These annual fees range from $2 to $5 per $1000 of your coverage. While this may seem small, this cost adds up. If you have a $500,000 policy, the extra $2.50 rate on your coverage will mean that you need to pay an extra $1,250 per year.
Occupational Hazards That Can Increase Life Insurance Rates
To determine whether or not your career is considered dangerous, insurers examine the risks that you face in your day-to-day.
Below are some of the risks that insurers look at. According to the Bureau of Labor Statistics, these are the risks that are most often the cause of fatal injuries in the workplace. If your job puts you at risk of one or more of these, you’re likely to be charged higher life insurance premiums.
Likelihood Of Transportation Accidents
Transportation and vehicular accidents are some of the most common causes of fatal injuries in the workplace. This hazard is usually faced by people who deal with vehicles regularly, like truck drivers and public transportation workers.
Likelihood Of Falls And Slips
Professions with a higher risk of injuries and death from falling are also considered hazardous. This includes people who work in roofing, construction, and power line repair.
Likelihood Of Encountering Violence
This work hazard takes into account injuries or fatalities resulting from violence by other people as well as animals. This hazard is common for police officers or military service members.
Contact With Harmful Substances And Environments
Because there are a lot of potentially harmful substances and environments, there is a wide range of occupations that fall into this category. Some examples of careers that may experience this hazard include offshore fishing, mining, and garbage handling.
Saving On Life Insurance If You Have A High-Risk Career
If you have a dangerous job, this doesn’t mean that you have no option but to accept the increased insurance rate. In this section, we’ll present several options to help you protect your loved ones with a lower insurance rate.
Consult An Independent Insurance Agent
Enlisting the help of an independent agent is a good way to find better policy deals. With their expertise, they can find the best-valued policies to support your protection plan as well as answer any questions that you may have.
Reduce Your Other Risk Factors
Before applying for a policy, take a look at the risk areas that you can feasibly reduce. A good way to get a lower life insurance rate is to improve your health. You can also make changes to your lifestyle, such as reducing your alcohol intake and quitting tobacco use.
Re-Apply If Your Work Duties Change
Because premiums are tied to the danger of your occupational duties, you can ask for a reconsideration when your duties change. This process allows you to go through underwriting again, and this could lower your premiums if your work duties become less hazardous.
Seek Insurance From Your Company
Some companies offer a group life insurance policy as an employee benefit. Because this is often offered free of charge, you can use this as an alternative to private life insurance.
However, term life insurance through your company usually has smaller coverage amounts that may not fulfill your life insurance needs. To improve your protection, you can supplement the coverage from your employer with a term life insurance policy with a smaller death benefit.
Your insurance rate is tied to your career because of your risk profile. Having a dangerous job means that you’re more likely to die prematurely, making you riskier to insure. While many occupational hazards may hike up your life insurance rate, there are steps you can take to reduce them in response.
If you’re looking for an affordable insurance policy while having a hazardous job, Wesley Insurance, LLC is here to help! Our team of professionals can assist you in finding the best policies that can protect you and your loved ones even if you have a dangerous profession. Contact us today for more information!