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Q

Q

Can my occupation affect my life insurance rates?

A

A

Yes. A risky job can potentially raise your premiums or even disqualify you from purchasing life insurance coverage.

Nupur GambhirRebecca Shoenthal author photo

Nupur Gambhir & Rebecca Shoenthal

Published September 30, 2020

KEY TAKEAWAYS

  • 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. They make this evaluation based on 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 in some cases.

Read on to learn what types of jobs insurance companies categorize as “hazardous,” how insurers use your job to calculate risk, and what you can do to reduce the cost of life insurance if you’re quoted for higher premiums because of your occupation.

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Why your occupation affects the cost of life insurance

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 that is factored into the cost of coverage.

How your occupation affects the cost of life insurance

To get the best classification 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, and high-rise construction, to name a few.

If your job does include hazardous duties, you can be quoted Standard rates, but depending on your job and the specific life insurance company, you could be charged extra flat fees ranging from $2 to $5 per $1,000 of life insurance coverage per year, according to Policygenius offerings in 2020.

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.

Which occupations can increase life insurance rates

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 will depend on the insurer. 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 warzones may not be able to get life insurance at all.

Some of the jobs that commonly require additional fees or table ratings include:

  • Active military
  • Aviation jobs
  • Bartenders
  • Building and construction workers
  • Electric powerline construction and maintenance workers
  • Fishing industry workers
  • Law enforcement workers
  • Lumber industry workers
  • Marine industry such as deckhands or sailors
  • Municipal and volunteer firefighters
  • Mining and quarrying workers
  • Oil and natural gas industry workers

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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Marijuana industry jobs and life insurance

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 payments from someone with income from the cannabis industry 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, more insurers will follow suit and offer policies to people in the industry. In the meantime, you may be able to find a smaller company that can offer you a policy if you’re working in the marijuana industry.

→ Read our reviews of the best life insurance companies for marijuana users.

How your occupation affects life insurance riders

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 type of rider — 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 typically offer it to people who have a high likelihood of disability due to their occupation.

Each company has its 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.

If you’re concerned that a disability could affect your ability to earn money, you should consider purchasing a separate long-term disability insurance plan, which is typically available to a wider variety of occupations. Disability insurance can offer some income protection if you are unable to work due to a disability and is typically cheaper than a disability income rider added to a life insurance policy. However, it should not replace a life insurance policy outright.

How your income affects your life insurance policy

Even if an underwriter doesn’t designate your occupation as risky, your income can impact your life insurance policy.

While you won’t receive a lower health 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.

How to save on life insurance if you have a high-risk occupation

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.

1. Work with an independent broker

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, the advisors are familiar with the underwriting guidelines of many insurance companies and will be able to recommend and work with the life insurance company that can give you the best rates.

2. Re-apply for life insurance or ask for reconsideration

If your job duties change and you think you might be eligible for lower rates, you can apply for reconsideration, where you go through the underwriting process again to demonstrate health improvements and potentially get lower life insurance premiums as a result. 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 4.5-9% every year that you age, you can also apply for an entirely new life insurance policy to get lower premiums if your job changes.

3. Pay your premiums annually

Depending on your insurance company, by paying your premiums annually instead of monthly, you can save between 2% to 5% on your premiums, based on policies offered by Policygenius as of September 2020.

How an occupation change can affect your life insurance

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. 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 risky.

By shopping around and exploring all your options, a high-risk job doesn’t have to stop you from getting the financial security you need.

Occupation and life insurance rates FAQs

What jobs are considered “high-risk” to insurance companies?

Any job that increases the risk of injury or death. Hazardous jobs include active military, pilots, bartenders, construction workers, electric power line construction and maintenance workers, fishing industry workers, law enforcement workers, lumber industry workers, marine industry workers, firefighters, miners, oil and natural gas industry workers, among others.

Does income affect your ability to get life insurance?

While you do not need to meet a certain income threshold to get approved for a life insurance policy, how much you make does determine the coverage amount. For example, if you make $50,000 a year, you won’t be eligible for a $2 million policy, but you can still purchase a smaller amount of coverage.

Can I get life insurance if I work in the marijuana/cannabis industry?

Most of the larger life insurance companies currently do not insure anyone who works in the marijuana industry because it is not legal on a federal level. However, some smaller companies may provide insurance coverage if you work in the industry.

Insurance Expert

Nupur Gambhir

Insurance Expert

Nupur Gambhir is an insurance editor at Policygenius in New York City. Previously, she has worked in marketing and business development for travel and tech. She has a B.A. in Economics from Ohio State University.

Insurance Expert

Rebecca Shoenthal

Insurance Expert

Rebecca Shoenthal is an insurance editor at Policygenius in New York City. Previously, she worked as a nonfiction book editor. She has a B.A. in Media and Journalism from the University of North Carolina at Chapel Hill.

Policygenius’ editorial content is not written by an insurance agent. It’s intended for informational purposes and should not be considered legal or financial advice. Consult a professional to learn what financial products are right for you.

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