Cost & Coverage
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What you do for work has ramifications for your life insurance policy. A risky job can cost you high premiums or sometimes even disqualify you from purchasing coverage at all.
What you do for work can affect how much you pay for life insurance if your job poses a risk to your health or safety
Individuals who work in the marijuana industry are currently ineligible for life insurance coverage from the top companies but may be able to purchase coverage from a smaller life insurance company
A high-risk job might disqualify an individual from purchasing some life insurance riders, such as a disability income rider
If you receive high life insurance premiums due to your work and later change jobs, you can ask your insurer for reconsideration or apply for an entirely new life insurance policy
The life insurance rate you receive from your insurer is determined by the underwriting process, where the underwriter gauges your risk of dying. They make this evaluation from information that they gather about you during your initial application interview and the medical exam.
While many people worry about how their health or any medical conditions might affect the cost of their life insurance policy, your occupation can also increase the cost of your premiums if it involves risky activities or is in a controversial industry, such as marijuana.
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Because your life insurance policy is determined by the risk of insuring you, insurers use your occupation — alongside additional factors such as your health and family history — to determine how much you pay for your life insurance premiums.
The risk you pose is based upon the likelihood that you might die. Life insurance companies use something called an actuarial table to estimate the probability that an individual will die at each age and determine how much you should pay for life insurance.
Based on statistical analysis, a job that jeopardizes your life or increases the likelihood of death is going to qualify you as a risky candidate on an insurer’s actuarial table.
To get the best rates, often called preferred best, or second-best rates, often called preferred, your job cannot include any hazardous duties. Each life insurance company has its own definition of “hazardous”, but generally, it means anything associated with an increased risk of injury or death: diving, mining, firefighting, high-rise construction.
If your job does include hazardous duties, you can be quoted standard rates, but depending on your job and the life insurance company, you could be charged extra flat fees which can cost you anywhere from $2 to $5 per $1,000 of life insurance coverage per year.
That means if you’re purchasing a $500,000 policy, having a hazardous job with a $2.50 flat rate could mean paying an extra $1,250 per year for life insurance — an extra $104 per month.
Each life insurance company has its own underwriting guidelines. This includes occupational ratings, which determine how much an individual in a specific career pays for life insurance.
Jobs with a high degree of risk will almost always result in extra fees, but the amount of those fees will depend on the insurer. It’s possible you could be assigned a table rating, which falls below a standard rating, the lowest of life insurance health classifications. These table ratings are called substandard and tend to be costlier than the lowest health classification.
Alternatively, if your job poses enough risk, you could be denied life insurance coverage altogether. People working in hazardous conditions, such as coal miners, or government employees working in war-zones may not be able to get life insurance at all.
Some of the jobs that commonly require additional fees or table ratings include:
If you work in any of these industries or have another job that involves physical risk, your life insurance advisor may ask you to answer more questions about your work, including your activities, tasks, working environment, and more.
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Currently, in the United States, individuals who work in the cannabis industry can’t purchase life insurance from any of the major life insurance companies — even if the business is legal in your state.
Because marijuana is still illegal at the federal level, processing money requires separate accounts and reporting that makes it fraught for many businesses, including life insurance companies.
It’s possible that as the marijuana industry grows and federal regulations change, insurers will follow suit and offer policies to people in the industry, though the life insurance industry is traditionally conservative and slow to change.
In the meantime, you may be able to find a smaller company who can offer you a policy if you’re in the marijuana industry.
You can add supplemental coverage to your life insurance policy with a rider. Some riders are free add-ons to your policy, while others may cost an additional fee or require additional underwriting.
One of these types of riders — the disability income rider — is generally unavailable to people with high-risk jobs. A disability income rider added onto a life insurance policy pays a monthly benefit if you become disabled and cannot work, and life insurance companies don’t offer it to people who have a high likelihood of this due to their occupation.
Each company has their own list of occupations that cannot purchase this coverage, and many occupations, including most self-employed jobs, are only considered on a case-by-case basis.
A separate long-term disability plan is typically available to a wider variety of occupations and can offer some income protection due to its more robust coverage and cheaper cost than a disability income rider.
Even if an underwriter doesn’t designate your occupation as risky, the income you bring in can still affect your life insurance policy.
While you won’t receive a lower classification — or higher premiums — because of how much you make, the total amount of life insurance coverage you are eligible for is dictated by age and income. Depending on your income, you may only be eligible for a lower amount of life insurance coverage than you initially applied for, which would naturally decrease how much you spend on your life insurance premiums. Some insurers may also have a minimum household income threshold that you need to meet to qualify for any coverage.
If you have a high-risk job, you’re not completely disqualified from competitive life insurance rates. There are a few steps you can take to get the best possible rates for your individual circumstance.
If you have a high-risk job, an independent broker like Policygenius can help you shop around and find the right life insurance company for your specific background.
When you work with an independent broker like Policygenius, our advisors are familiar with the underwriting guidelines of many insurance companies and will be able to recommend and work with the life insurance company who can give you the best rates.
If your job duties change and you think you might be eligible for lower rates, you can apply for reconsideration, where you re-do the underwriting process to prove any changes and improvements in your current circumstance that might get you lower life insurance premiums. You’ll need to have your policy for at least a year, though each insurer treats reconsideration differently.
While the cost of applying for a life insurance policy increases about 8-10% every year that you age, you can also apply for an entirely new life insurance policy to get lower premiums if your job changes.
By paying your premiums annually instead of monthly, you can save between 2% to 8% on your premiums, depending on your insurance company.
You’re only underwritten at the time of application, so if you change jobs, you may qualify for better life insurance premiums than you did before if you apply for a new policy. Likewise, if you have a relatively safe job and pay competitive life insurance rates, the insurer cannot change your rates if you later start a job that is deemed high risk.
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