Life insurance is a financial security net for your loved ones in case you die. It helps to cover your family’s costs of living and their needs.
The likelihood that you will either live a long time or die at a young age can be calculated based on a series of factors, which is a tool life insurance companies use to determine the premiums for a policy.
It may be obvious that life-shortening factors – such as smoking, chronic health conditions or participation in hazardous activities – can increase your premium rates. But, life insurance companies will also consider a number of other risk factors, one of them being your occupation.
Certain occupations may have an adverse effect on mortality due to the nature of the job, which is why life insurance must impose an extra charge on applicants engaged in such occupations. In fact, an insurance company could even deny an applicant a policy if their occupation is classified as “too dangerous”.
The higher mortality rate associated with these occupations may be attributed to a greater than normal accident hazard, unhealthful working conditions, or “socioeconomic” hazards, according to McGill’s Life Insurance.
Occupations that are exposed to a greater than normal accident hazard rate are machinery, construction, electrical, railroad workers, fishery and farming industry. These individuals are more likely to suffer a work-related injury or even fatality than someone who works a desk job.
Applicants exposed to unhealthful working conditions are also more likely to experience a higher premium rate as harmful working conditions could affect one’s life expectancy. For insistence, dust is probably the most dangerous health hazard as long-term exposure could lead to tuberculosis or a variety of respiratory infections.
Other harmful working conditions include temperature abnormalities, radiant energy, electrical shock, chemical and lead poisoning or infections.
According to McGill, the socioeconomic hazard is associated with occupations that employ unskilled or semi-skilled employees and who pays low wages. The extra mortality charge is due to their unsatisfactory working and living conditions.
In addition, socioeconomic hazards could also be linked to the job environment. For example, bartenders and cab drivers may suffer a higher life insurance premium, as their profession could seem hazardous to an insurance company.
All insurance companies have occupational manuals in which they list the occupations that are deemed to have adverse effects on mortality. If an applicant’s place of employment is listed, they will be required to pay an additional premium. Previous employment may also affect rates if there is reason to suspect that the applicant either suffered from any work-related conditions or may return to the occupation in the future.
Fortunately, due to increased safety measures in the workplace, less and less applicants are being denied because of their occupation.