High-risk occupations, life insurance and income protection
How does a risky occupation affect your income protection and life cover?
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Insurers class occupations into various levels of risk ratings. If you work in a dangerous occupation, you could be categorised as high risk. This means as a policy holder you'll either:
- Pay an additional premium to get cover
- Be excluded from cover all together
- Be assessed further determine your occupations risk rating (if it's not already classified)
What's covered in this guide?
Unsure whether your occupation might be classified as a high-risk job by your life insurer? Occupations that are commonly placed in the high-risk category include those that involve:
- Working at heights, for example, as a window cleaner
- Working underground, for example, as a miner
- Working with firearms, such as if you are employed as a police officer
- Working with explosives or dangerous chemicals, for example, if you work in the demolition industry
- Serving in the armed forces
- Working in any other occupation in a war zone, for example, as a journalist
- Working in an occupation that exposes you to diseases, such as working as a doctor or nurse
- Working with heavy machinery, for example, on large construction sites
- Working in any occupation that exposes you to danger, such as if you’re a firefighter or an airline pilot
|Occupation||Risk level||Average monthly premium*|
|Office Worker||Low risk||$92.51|
|Train driver||Medium to high||$138.34|
*Risk levels are to be taken as a rough guide. Average monthly premium has been taken from finder's quote engine. Quotes last checked on October 2016 and are subject to change.
Each insurer will vary in the way it assesses the risk of your job. However, as a general guide:
- Overall risk of your job title
- Your individual duties and the hazards they involve
- The environment in which you work in
Here's how your occupation could be classified:
|Risk||Details||How does this rating impact my policy?|
|Low||Low to no manual work e.g. office workers, retail supervisors||Likely no effects|
|Medium||Worker that involves manual labour e.g. a tradesmen||Higher premiums|
|Medium to high||Heavy manual work e.g. A factory machinist||Higher premiums|
|High||Jobs that involve dangerous activities and environments eg, a miner||Higher premiums or exclusions|
|Non-insurable||An extremely risky job e.g. firefighting (for some brands)||No cover|
|Individual consideration||An occupation that's not listed by the insurer||Further assessment of job required|
Life insurers take several steps to assess whether or not you are a high-risk applicant. Each insurer employs a team of underwriters who determine whether or not your application for cover will be accepted and, if so, whether any terms and conditions will apply to your cover.
To determine whether an individual is high risk, the insurer may:
- Ask questions about your health and lifestyle during your cover application
- Require you to undergo a medical examination
- Require you to provide medical reports
- Take into account non-work related factors such as pastimes, lifestyle and smoking status
Once the underwriters have all the information needed to calculate your level of risk, they can then decide whether or not to offer you cover. If cover is provided there may be terms and conditions attached, such as premium loadings or specific exclusions.
If you clean windows on low-rise buildings your risk may not be the same as high-rise window cleaners
It’s worth pointing out that just because you work in one of these professions it doesn’t necessarily mean that you will automatically be classified as high risk.
Insurance providers will instead use further criteria to determine the likelihood of you suffering injury, illness or death as a result of your occupation, some of which include:
- How hazardous your individual role is. For example, if you work in the mining industry and this sometimes involves the use of heavy machinery, the insurer will require details on the type of machinery you work with and how often you do so as part of your job. If you work at heights, you’ll need to provide details on the average height where work takes place and how long you spend working at that height.
- How much experience you have in your position. You may find that someone with ten years of experience pays cheaper life insurance premiums than someone who is only in their first year in the same occupation.
If you’re a high-risk individual and you’re looking for life insurance or income protection to protection in case you can no longer work, the good news is that it’s still possible to find an insurer. Keep the following points in mind to ensure that you find a policy that matches all your cover requirements:
- Don’t be discouraged. Don’t let your classification as a high-risk individual put you off obtaining cover. Life insurance offers crucial financial protection for you and your loved ones, so it’s worth searching around for affordable cover.
- Shop around. Australia’s life insurance industry is highly competitive, so don’t just settle for the first insurer you find. Compare quotes from a range of providers to find the best value for money.
- Reduce your risk. Lowering your level of risk can reduce the cost of life insurance premiums and also open up the range of cover options. You may be able to reduce your risk by switching jobs within your industry, such as taking on an office job in construction rather than working on a construction site. Of course, changing jobs won’t be an option for many so it’s worth looking at other ways to lower your risk, such as quitting smoking or stopping your participation in adventure activities.
- Read the fine print. It’s always a good idea to check the exclusions and restrictions that apply to your life insurance policy. This will help you understand in which situations you will and won’t be covered, including any claims that arise due to your occupation.
- Get help. Finding the right life insurance policy can be tricky and confusing. If you need help, make an appointment with a trusted insurance adviser. He or she should have an in-depth knowledge of the insurance industry and can help you find a policy that perfectly suits your requirements.
Not necessarily. If you have a higher income that needs to be covered this will likely increase the cost of your income protection. Additionally, having the most dangerous job doesn't mean you'll earn the highest income as shown below:
|Rank||Dangerous industry||Average income||Rank|
|1||Agriculture, forestry and fishing||$76,630*||8|
|2||Transport, postal and warehousing||$89,799||5|
|5||Electricity, gas, water and waste services||$105,030||2|
|8||Arts and recreation services||$79,030||7|
|9||Health care and social assistance||$90,189||4|
|10||Administrative and support services||$73,882||10|
Source: finder.com.au, abs.gov.au, payscale.com
There are four main types of life insurance, each of which offers a very important form of cover:
- Term life insurance. Pays a lump sum benefit to your loved ones if you die or are diagnosed with a terminal illness.
- TPD insurance. Provides a lump sum benefit if you suffer a total and permanent disability.
- Income protection insurance. Pays an ongoing monthly benefit if you suffer an illness or injury and are unable to work.
- Trauma (critical illness) insurance. Provides a lump sum benefit if you suffer a serious illness.
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