Does Your Job Affect The Cost Of Life Insurance?

Does Your Job Affect The Cost Of Life Insurance?

Written by Priyanka Correia
Fact-checked by Caitlin Wood
Last Updated July 12, 2021

Plenty of factors go into calculating the cost of a life insurance policy, and occupation is one of them. If you work a job that puts you at a higher risk of getting hurt, you could be faced with higher premiums.

Let’s go into more detail about how your job could impact how much you pay for a life insurance policy. 

Life Insurance Premiums And Risks

The price you pay for a life insurance policy is determined by risk. Your insurance provider will assess your risk factor before assigning a specific premium for your policy. If you’re considered a higher risk, your premiums will be higher. If you’re deemed to be less of a risk, you’ll be rewarded with lower premiums. 

Insurance companies are in the business to make a profit, and if they take on too much of a risk, their profits can suffer. That’s why they’ll charge higher premiums to those who pose a greater risk. That way, they can ensure that they will still make money even if the odds of you passing away sooner rather than later are high based on your health, lifestyle, and occupation. 

More specifically, the following factors influence the price you pay for a life insurance policy:

  • Age
  • Gender
  • Health
  • Family health history
  • Lifestyle
  • Occupation
  • Smoking
  • Coverage amount

Based on these factors, your insurance provider will come up with a premium that will ensure that they keep profit margins wide enough. 

Learn more about why life insurance is more expensive for men than for women.

Does Your Job Really Affect The Cost Of Life Insurance? 

Yes, your occupation is one of the key factors that comes into play when insurance providers determine the price of a life insurance policy. Basically, the more dangerous your job is, the higher a risk you pose for the insurance company. In turn, you’ll likely be charged more for your policy, though other factors also play a role. 

The degree to which your job will affect the cost of your life insurance policy will depend on the insurer, since the way that each provider calculates risk can differ slightly from each other. Life insurance providers use what’s known as an “actuarial table,” which helps these companies estimate the probability of death of a person at each age. This is factored into the cost of insurance premiums.

The exact amount that you will pay will be calculated on a few factors, such as the risk of harm and the number of hours you work. Generally speaking, if your job can increase the chances of death, then your policy will cost you more. Again, it all comes down to risk level on the part of the insurance company holding your policy.

Some insurers may even deny coverage entirely based on your job. Certain jobs, in particular, can come with much higher risks than others that could be deemed too risky for insurers to offer a life insurance policy. A job with a high risk of death or injury will make it more difficult to secure a life insurance policy. 

What Type Of Jobs Affect The Cost Of Life Insurance? 

The perception of risk will depend on the insurance company. But in general, certain jobs will be considered more dangerous than others and will be factored into the calculation of the cost of the policy. These can include any one of the following:

  • Military
  • Aviation jobs
  • Construction workers
  • Electric powerline workers
  • Firefighters
  • Fishing industry workers
  • Law enforcement 
  • Marine workers, such as sailors
  • Miners
  • Oil and natural gas industry workers

The above occupations present a type of danger that the average 9 to 5 office job would not. Since the workers in the above-mentioned industries put themselves at greater risk, the odds of them dying on the job are higher. In turn, the cost of life insurance will likely be higher, too.

How Your Job May Affect Your Riders

Not only can your life insurance policy be more expensive if you work a dangerous job, you could also find additional riders unavailable to you. Riders are meant to help policyholders customize their policies to ensure full and comprehensive coverage. These riders usually come with an extra cost. 

But, some types of riders may be more difficult to get if you are deemed to work a hazardous job. For instance, a disability income rider — which provides coverage for lost income as a result of a disability — may likely be unavailable to those with high-risk occupations. Life insurance providers typically don’t offer this type of rider to people with a higher chance of disability as a result of their job.

If you find that you are ineligible for a disability income rider and are concerned that your chances of needing financial protection at some point are high, then you may want to consider buying a long-term disability insurance plan that would be separate from a life insurance policy. 

These types of plans are typically available to a broader range of occupations. If you suffer an injury or illness because of your job and are not able to work as a result, disability insurance provides you with some income compensation. Plus, this plan is often more affordable than a disability income rider that is added to a life insurance policy. 

Curious about how your plan compares? Find out the average cost of life insurance in Canada.

How Can You Stop Your Job From Affecting Your Premium? 

If your job is classified as high-risk, there may be ways to keep your rates lower:

Use An Independent Insurance Broker

Brokers do not work with one specific life insurance company the way agents do. Instead, independent brokers will shop around on your behalf and do the legwork to find the best life insurance company that can accommodate your particular situation and give you the lowest rates.

Re-Apply For A Policy If You Change Jobs

If you change your job or assume different duties at some point that puts you less at risk, ask the insurance company to either reconsider you or apply for a new policy altogether.

Pay Your Premiums Yearly Instead Of Monthly

If possible, consider paying your premiums on an annual basis instead of monthly. Annual payments can be anywhere from 2% to 5% cheaper than monthly premium payments. 

Final Thoughts

If you have a high-risk job that makes it difficult to secure affordable premiums, you may want to do some comparison shopping among various insurance providers to find where the lowest rates are. The best way to do that is to use an independent insurance broker or online insurance aggregator that can do all the shopping for you. That way, you can be certain that you’re getting the lowest rate possible based on your job and other factors that influence your premiums. 

Rating of 5/5 based on 2 votes.

Priyanka is a personal finance expert at Loans Canada. She is passionate about money management and educating Canadian consumers about how to take control of their financial lives. She has taken financial control of her life by using Mint to budget and track her expenses while growing her wealth by investing through Wealthsimple. She also believes in having an emergency fund, so she keeps a good sum of money in an easily accessible high-interest savings account. She also uses the American Express Cobalt Card to earn points on all her purchases, further fueling her savings goal. She also uses Loans Canada’s lender directory whenever she wants to compare rates from different lenders.

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