Life insurance is essential if you have people relying on your paycheck. You may be worried that your high-risk job will disqualify you from coverage, but that’s often not the case.
While you’ll likely face higher premiums than those in less hazardous professions, obtaining a policy is usually still possible.
In this article, we’ll clarify why your job matters to the life insurance companies, how they calculate the cost of your policy, and tips on getting the best price.
Table of Contents
- Why High-Risk Jobs Matter to Insurers
- How Insurers Determine Risk
- The Cost of Life Insurance Coverage
- Policy Options for Those With High-Risk Jobs
- Group vs Personal Life Insurance
Why High-Risk Jobs Matter to Insurers
Life insurance companies are all about risk. If the odds are higher that your application will result in a claim, the higher the cost of your coverage.
Your occupation likely isn’t the first of its kind. There’s lots of statistical data about your job and the risk it poses to your longevity. For example, a firefighter risks more going to work every day than an accountant and, all other things equal, will pay higher life insurance premiums.
Insurance companies want to approve as many applicants as they can, but they need to balance their risk. The process of reviewing, approving, and assigning a risk class to an applicant is called underwriting.
How Insurers Determine Risk
When you apply for life insurance, the insurance underwriters evaluate a number of factors, including:
- Medical History
- Occupation and Hobbies
- Lifestyle Habits
They will review your application, but may also request additional records like medical history, driving reports, financial statements, and even a background check. Some applicants will also need to undergo a brief medical exam.
Once you’re evaluated, if they are willing to offer you coverage, they’ll assign you a specific risk class, also known as a rate class since they ultimately determine the cost of your life insurance policy.
The most common risk classifications fall into one of three groups: preferred, standard, and substandard.
- Preferred classes are reserved for the healthiest individuals and offer the best pricing.
- Standard risk classes are for people with average health and life expectancy.
- Substandard classes are for high-risk individuals.
- Tobacco users have their own standard and preferred classes.
In some cases, insurers will charge a flat extra for applicants with high-risk jobs. This is an extra cost that an insurer adds to normal premium fees to compensate for the additional risk the applicant presents, based on mortality rates.
This fee is calculated per $1,000 of coverage you buy and added to your regular monthly premium.
Two 40-year-old men both apply for a $325,000 20-year term policy. One works in a high-risk job.
The man with the low-risk job gets a Preferred Plus rate, paying $20.65 per month.
The man with the high-risk job also qualifies for Preferred Plus, but with a $3 flat extra. To find the extra cost, you multiply $3 by 325 (the coverage amount in thousands), resulting in an added $975 per year. His monthly premium is then $101.90.
|Note: Not all companies make the flat extra permanent. Some may require it only for a few years. Or some may instead offer a rate class less than Preferred Plus, which is the best you can receive, and forgo any flat extra.
The Cost of Life Insurance Coverage
The price you’ll pay for life insurance can vary significantly based on several factors, including your job and overall risk profile. While higher-risk occupations often result in higher premiums, these rates are not set in stone.
Working with a broker can help you find the best deal. At Quotacy, we review your application before sending it to the insurance company. This allows us to identify any risk factors you may have and pair you with an insurer that’s more lenient towards your specific situation. For instance, if you’re a pilot, we know which companies offer better rates for your profession.
After you submit your online application, we’ll check to make sure you’ve chosen an insurer that offers favorable terms for your circumstances. If not, we’ll reach out and recommend shifting your application to a company that could offer you a more competitive rate.
When the insurer makes their offer, if you find that the rates are too high for your comfort, we’re here to help tailor your coverage to better fit your budget. As your broker, we can explore alternative options such as switching to a different policy, adjusting the coverage amount, or changing the term length. Our primary role is to advocate for you and ensure that you get a policy that meets both your needs and your financial comfort zone.
See what you’d pay for life insurance
Policy Options for Those With High-Risk Jobs
If you work in a high-risk field, getting life insurance might be challenging, but it’s not impossible. You should know, however, that your premiums will likely be higher. Let’s break down your options:
Term Life Insurance
Term life insurance is the most popular choice for families due to its simplicity and affordability.
- Duration: You can select a specific term length, usually between 10-40 years. This timeline ideally should align with the period when financial support for your dependents is most needed.
- Purpose: Primarily designed for income replacement, this policy doesn’t offer lifelong coverage, making it a cost-effective option.
Permanent Life Insurance
Permanent life insurance offers lifelong coverage and can include additional features that increase the cost. Here’s a breakdown of the different types:
- Whole Life Insurance: This offers guaranteed death benefits, cash value growth, and fixed rates, making it one of the pricier options. Participating whole life policies may even earn dividends.
- Universal Life Insurance (UL): UL offers flexibility, allowing adjustments to both death benefits and premiums to accommodate life changes. While it may have fewer guarantees, this adaptability can be attractive to many.
- Guaranteed Universal Life Insurance (GUL): For those seeking lifelong coverage without the extra features and associated costs, GUL is an appealing choice. It provides essential permanent coverage at a more budget-friendly price point.
Guaranteed-Issue Life Insurance
Guaranteed-issue life insurance is a type of permanent insurance that doesn’t require any medical underwriting. It’s typically available to people aged 50-80.
If you’ve been denied life insurance in the past due to your occupation, this policy may be a suitable option. One thing to note is that guaranteed-issue policies typically have much lower coverage amounts available. These policies are often purchased to provide loved ones enough funds to cover a funeral.
Accidental Death Insurance
Accidental death insurance may be an option if you can’t get traditional life insurance. This policy provides a death benefit if you die due to an accident.
This policy doesn’t provide complete protection. If you die due to illness, such as a heart attack or cancer complications, it won’t pay a death benefit. But it still provides some peace of mind and is very affordable.
Group vs Personal Life Insurance
Many workers, even high-risk job holders, are offered life insurance through their employers. It’s good to take advantage of this benefit.
Typically, you can buy additional life insurance coverage on top of the free group insurance without going through any underwriting. This is called voluntary life insurance; you can often buy up to 3-5 times your salary.
However, group life insurance has its limitations:
- Limited Coverage: Employer plans often only match your annual salary, which may fall short of the generally recommended coverage of 10 times your annual salary.
- Employment Tied: Your group policy only pays out if you’re employed at the company at the time of your death. Many employers will end your benefits and employment if you can’t work for an extended period.
- Emotional and Financial Strain: The last thing your family needs after losing you is to discover that your life insurance has lapsed because you’re no longer employed.
If you work in a high-risk field, the smartest approach is to supplement your employer’s offering with a personal policy. This gives you and your loved ones additional financial security, offering peace of mind.
But if you’ve been denied traditional life insurance, we recommend accepting the group life insurance coverage and buying as much voluntary supplement coverage as you can comfortably afford.
Get Quotes and Apply for Life Insurance Through Quotacy Today
Life insurance is essential for almost everyone as a cornerstone of a sound financial plan. Its purposes range from replacing lost income to covering end-of-life expenses and offering financial support to loved ones.
If you’re in a high-risk job, having life insurance becomes even more crucial, particularly if your family relies on your income.
If you don’t yet have life insurance, buying has never been easier. Here’s how you can get started:
- Get Free Quotes: Instantly view free term life insurance quotes without giving away any contact information.
- Compare Options: Review policies from top-rated insurers, all in one place.
- Apply Online: The application is user-friendly and takes only a few minutes to complete.
- Personalized Assistance: Once submitted, a dedicated Quotacy agent will be assigned to you, working diligently to ensure you receive the best price possible and guiding you through every phase of the process.
While we cannot guarantee your insurability with a high-risk occupation, we’ll do our best to help you get a great life insurance policy in place to protect your loved ones.
Unsure how much life insurance you need? Try our life insurance calculator.
Note: Life insurance quotes used in this article are accurate as of October 23, 2023. These are only estimates and your life insurance costs may be higher or lower.