How your occupation or hobbies affect your life insurance
Many people buy life insurance to help their families replace their job income if they die suddenly. But did you know that the type of job you have can affect your life insurance options?
Just like your age or health, insurance companies look at your occupation when you apply for a policy. A high-risk job or high-risk hobbies can impact your rates or eligibility for certain types of life insurance. Luckily, there’s a plan out there for nearly everyone – even if you spend your days performing duties that would make some people break into a cold sweat.
Here’s everything you need to know about how your job or hobbies affect your life insurance, what’s considered high-risk, and the best policies if you work in a hazardous field.
Can your job affect your life insurance rates?
Life insurance provides a financial backup plan for your loved ones. If you die while the policy is active, they receive a cash payout they can use for anything from monthly bills to paying debts to covering medical bills and funeral expenses.
Since your insurance company is insuring your life, they want to know about anything that might affect your life expectancy. That includes your health, your age, and your lifestyle, including your occupation.
During the underwriting process, life insurance companies look at your occupation to help set your rates and approve you for coverage. If you work in an office job or another profession with lower risk of fatalities, then your occupation should have little impact on your eligibility. Jobs or hobbies that put you at a greater risk of bodily injury or death can negatively affect your rates and coverage options, however.
Do you have a high-risk job?
In 2019, the average fatal work injury rate was 3.5 fatalities per 100,000 full-time equivalent workers, according to the Bureau of Labor Statistics. If your occupation’s fatality rate is significantly above that, it could impact your life insurance coverage.
When applying for coverage, keep in mind that each insurance company has its own criteria for determining prices and eligibility. One might assign you a different price than another, and they all define “hazardous activities” a little differently.
Some of the main occupations that fall into the high-risk category for insurers include:
- First responders. This can include law enforcement and municipal and volunteer firefighters. As a first responder, you might be subject to higher rates or fees. A lot depends on the nature of your work. For example, if you are a municipal police officer who spends most of the day in the office, your job likely won’t affect your rates as much as if you work in a major city or as part of a bomb squad.
- Active military. Active military members typically don’t qualify for individual life insurance, but service members are automatically enrolled in a government life insurance plan. Learn more about life insurance for active and retired military.
- People working in emerging countries or war zones. If you are a government worker, media worker, or medical worker who goes abroad to developing nations or areas of active conflict, this will likely impact your ability to get covered.
- Aviation jobs. This includes both commercial and private pilots, as well as those who fly for fun.
- Construction workers. This includes building and skilled trades workers, as well as those who work in powerline construction and maintenance.
- Natural resources workers. Natural resources workers include those who work in the oil and gas industry, the mining industry, the quarrying industry, the marine industry, the lumber industry, and the fishing industry. In general, if you’re exposed to the elements in your work, insurance companies will take that into consideration.
- Bartenders. Some insurers consider bartending a high-risk job and will factor it in when considering you for life insurance coverage.
- Marijuana industry. If you work in the cannabis industry, most insurance companies won’t be able to offer you life insurance. Even if marijuana is legal in your state, it’s still illegal at the federal level, and accepting payments from industry workers can pose ethical issues for insurers.
If you work in any of these settings, the insurer will ask for more information on your working environment to assess the risk of insuring you. They are likely to ask about daily activities and responsibilities, physical working conditions, and more.
Based on your information, the life insurance company assigns you a classification rate. These rate classes are based on a number of factors, including your job, your health, your age, your driving record, nicotine and alcohol use, and your lifestyle choices. The main classes include:
- Preferred Plus. Also referred to as Preferred Elite or Preferred Best, this is the best classification you can get. People who are rated Preferred Plus get the lowest life insurance prices.
- Preferred. A Preferred rating is the next class after Preferred Plus. You can still count on fairly affordable rates with this classification.
- Select. If you received the Select rating, you might have a few red flags, like being overweight or a history of previous illness, but you are still a fairly good candidate for life insurance.
- Standard. The Standard rating means there are significant issues with your application, such as your health, age, or lifestyle factors. You will pay higher rates as a result, but you are still eligible for coverage.
A lower-risk job can help you get a better classification, while a higher-risk job can mean a lower classification. Some insurers might also charge an extra flat fee for your life insurance coverage if your job includes hazardous duties.
How do your hobbies affect life insurance?
Outside of your day job, engaging in adventurous or risky hobbies for fun can also affect your eligibility and rates. Since these activities can also put you at greater risk of injury or death, insurance companies will want to know about them when you apply.
Wondering which hobbies and sports life insurance companies consider high-risk? Insurers typically ask about activities like:
- Piloting planes
- Scuba diving
- Mountain climbing
If the insurer finds that these hobbies or any other activities put you at a higher risk of premature death, this can affect the price you pay for life insurance.
Keep in mind that insurance companies rate each person individually based on their overall estimated risk. During the application, your insurance company is likely to ask questions about your hobbies, like how often you participate in them and which safety precautions you take. Occasional participation, like going scuba diving one time while on vacation, may not impact your coverage.
Other factors that affect your life insurance coverage
Beyond your job, insurers look at several factors to determine your eligibility and the price you’ll pay for coverage. If you have a high-risk occupation, having a squeaky-clean record in other areas can help during the application process. The major factors insurance companies consider are:
- Age. In general, the younger you are, the less you’ll pay. Rates go up about 8-10% with every year you age. If you’re younger, you’ll also typically have more choices in types of policies or in term lengths if you’re buying term life insurance. That’s why it’s almost always better to buy sooner than later.
- Health. Your medical history is another big factor in your application. The insurance company looks at your height, your weight, any major hospitalizations or surgeries, prescription medications, chronic conditions, and more. They will also ask about your family history, including any chronic conditions or history of sudden death before 50, as well as whether you smoke, drink, or use recreational drugs.
- Lifestyle factors. Other factors that life insurance companies consider are your driving record, previous arrests or incarcerations, and foreign travel. Asking about these lifestyle factors is all part of understanding your overall risk as a policyholder.
- Income. Regardless of how risky your job is, the insurer will consider your income during the application process. Your income won’t affect your classification or premiums, but it does help determine how much coverage you can buy. As a rule of thumb, most insurers cap you at 20 to 30 times your income. If you stay at home and rely on your partner’s income, the insurer will look at that to determine your coverage amount. Between jobs? The insurer can look at your salary history to determine how much coverage you’re able to buy.
The best life insurance for people with high-risk jobs or hobbies
If you participate in risky activities for work or pleasure, making sure your family is protected can be even more important. Know that there are options available to you – the riskiest move is not buying life insurance at all.
When you apply, it’s important to be truthful on your life insurance application. Not sharing key information about your background can mean that you are disqualified later from coverage. Worse, your family could miss out on the payout they were counting on if your insurer finds out your application was inaccurate and declines to pay out your policy.
If you’re concerned about how your job might impact your life insurance options, here are some tips for getting covered and saving on rates:
- Shop around. Every insurance company treats your professional background a little differently. You could end up with more options or favorable prices at one insurance company versus another. Working with a life insurance broker that offers access to multiple plans in the same spot can help you find the best fit. They know the underwriting guidelines and which policies are best, based on your background. eFinancial agents work with top-rated companies to help you shop, compare, and buy the right plan. We’re here to answer any questions you have about how your job affects life insurance.
- Let your insurer know if things change. If you buy a policy with higher rates because of your job, let your insurer know if your duties change. Some insurers will re-evaluate your plan and might lower your premiums as a result. Depending on the insurer, you might need to have owned the policy for a certain length of time. On the flip side, if you are moved into a higher-risk job after you buy insurance, don’t worry. Your insurer can’t change your rates after the fact because of a job change.
- Consider an accidental death benefit plan. If your job is making your rates too expensive or preventing you from buying a conventional term life insurance or permanent life insurance plan, an accidental death benefit (ADB) plan might be a better fit for you. An ADB plan offers protection for you and your family if you die or suffer a major injury in an accident that is covered by your policy. The ADB plan is a standalone policy, unlike the accidental death benefit rider, and it’s more affordable and easier to buy than term or permanent life insurance. You might not qualify for coverage if you enjoy risk-taking hobbies like skydiving or mountain climbing or work in a high-risk job like law enforcement, firefighting, or the military. That said, it can be a good fit for people in hazardous occupations who are at greater risk of accidents.
- Pay your premiums annually. If you’re paying higher rates because of your job, choosing the right payment schedule can help cut down on your out-of-pocket costs. With annual premiums, you pay your insurance bill once a year and typically get a discount of up to 5% on your rate.
Life insurance riders for people with high-risk jobs or hobbies
When you apply for life insurance, you might have the chance to customize your life insurance policy with riders. Life insurance riders are optional features you can purchase to customize your life insurance policy to match your situation, lifestyle, health, or your loved ones’ financial needs. eFinancial has a number of life insurance rider options available.
Keep in mind that a high-risk job might prevent you from qualifying for certain riders:
- Waiver of premium disability rider. If you become disabled and cannot work, a disability rider lets you stop paying your premiums while still maintaining your life insurance coverage. Life insurance companies don’t typically offer this type of rider to people who have a high likelihood of disability due to their occupation. Each company has its own list of criteria, so talk to an agent about the specifics for your policy.
- Accidental death benefit rider. Accidental death benefit riders give your family access to a bigger cash payout from your policy if you die because of a covered accident. This can be a good fit for people who are around hazardous conditions for their work, but people in certain occupations might not qualify, like firefighting or the military.
Still have questions or want more information about high risk activity life insurance?
We’re here to help. eFinancial works with top-rated life insurance companies to help you find the right coverage for you and your family. Call us or start your quote online today.