The Impact of Occupation on Term Insurance Premiums

If you initially felt that the insurance agent was biased and discriminatory, just like Akash did, you are not alone. While most people do consider factors like age, gender, income, and health while calculating their tentative premiums, they do leave behind a crucial factor: their occupation and the risk associated with it. If you want to understand the impact of occupation on term insurance premiums, read on and find out more.

How does occupation impact insurance premiums?

The impact of occupation on insurance premiums is simple: the higher the risk associated with the occupation, the higher the premium will be. So, for a person engaged in a high-risk profession, the premium amount will be significantly more than that of a low-risk profession, even if all other factors associated, like age, medical history, and income, are identical.

The rationale for this is that a person engaged in a high-risk profession has a high probability of early dismissal or ends up with a life-altering condition, which might render them unable to work in the future. Therefore, they are more likely to die during their tenure, making them high-risk clients for insurance companies.

When is a profession considered high-risk?

The general rule of thumb is that if the profession increases the possibility of early demise or is generally life-threatening, the profession is to be considered high-risk. Typically, the following factors contribute to a high-risk profession

Stressful Jobs

High-stress jobs, such as emergency responders, surgeons, and stock traders, can lead to severe health issues like hypertension and heart disease. These risks make insurers charge higher premiums for individuals in such professions.

Jobs Requiring Traveling

Frequent travel increases accident risks, especially for pilots, truck drivers, and journalists. The higher likelihood of injury or fatality makes insurance providers classify these occupations as high-risk, increasing premium costs.

Jobs Involving Exposure to Toxins or Chemicals

Workers in chemical plants, mining, or radiation-related fields face exposure to hazardous substances, increasing the risk of chronic illnesses or fatal conditions. As a result, insurance companies charge higher premiums for individuals in such professions.

Jobs Having Night Shifts

Working night shifts, such as in healthcare or security, disrupts sleep patterns and increases health risks like cardiovascular diseases. Since long-term health decline is a concern, insurers often categorize such professions as high-risk.

How to combat the high premium?

Unsurprisingly, people in high-risk professions have to pay higher term insurance premiums. However, that should not deviate you from picking a highly rewarding profession, as you can easily combat the high premiums with the following tips:

Add-On Benefits

Adding add-on benefits is one of the most reliable ways to combat high premiums associated with high-risk jobs. Several accidental death covers are specially designed for people in high-risk professions, offering targeted coverage for their profession at affordable costs.

Lifestyle

If your profession is considered high risk due to its negative impact on your health, you can reduce its negative effects by living a healthier lifestyle. For instance, if you work a night shift but maintain a fixed sleeping schedule to ensure healthy lifestyle choices, you can easily avoid the negative effects of working non-standard hours.

Amount Of Cover

You can also consider adjusting the cover amount to reduce the term insurance premium. Generally, a high cover has a high premium. So, if your current premium feels too heavy, you can reduce the amount of cover. However, this does not mean you will be left with inadequate cover. You can discuss an optimal cover at an affordable price with your insurer. And you can always make alterations to it in the future.

Shop Around

To go with the first insurer you meet is like choosing a surgeon based on who answered the phone first. It is betting your life savings on a coin flip. So, before you finalize who you want to buy the policy from, shop around and see what each offers.

Frequently Asked Questions

What are some common high-risk professions?

While several factors can make a profession high-risk, especially from the insurance point of view, some of the most common high-risk professions are construction workers, logging workers, roofers, agricultural workers, aircraft pilots, flight engineers, firefighters, ironworkers, miners, and police officers.

Why do people opt for high-risk professions?

Despite several disadvantages like high chances of early demise or ending up with a lifelong condition that negatively impacts one’s daily life, several individuals opt for high-risk professions. The reason is simple: the higher the risk, the higher the compensation.

Can job requirements like working “night shifts” impact premiums?

Yes, job requirements like working “night shifts” impact premiums. It is because working non-standard hours, like night shifts, can negatively impact your health, making it a high-risk occupation.