How hazards in your occupation affect life insurance, how it is determined and advice on getting cover as a high risk individual
Life insurance is all about providing protection; protection for yourself, protection for your loved ones, and protection against whatever the future may hold. If an unexpected tragedy or serious medical event turns your family’s world upside down, life insurance provides a safety net to ensure that you and your loved ones can survive the resulting financial impact.
If you work in a dangerous occupation, you could be classified as a high-risk individual by life insurers. Not only can this affect the cost of life insurance and the level of cover you can obtain, but it can also have an impact on your ability to qualify for a policy in the first place.
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.
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
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, occupation and lifestyle during your cover application
- Request more detailed information specific to a particular area of risk, such as your individual duties and the hazards they involve
- 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.
What happens if I lie about my occupation?
Say I clean windows on low-rise buildings, is my risk 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 10 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, the good news is that it’s still possible to find an insurer that can offer you the cover you need. However, 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.
Can participating in non-work related activities affect my life insurance application?
Will a 50-year-old pay more for life insurance than a 30-year-old?
Are there companies that specialise in high-risk life insurance?
Can I qualify for standard life insurance if I’ve previously been classified as high risk?
Does high-risk life insurance cost more than standard life insurance?