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Does your occupation affect what you pay for life insurance?

This weekend there was an article in the Sunday Star Times entitled “Thousands dying of work-related cancers”.

This raises the obvious question… does your occupation affect what you pay for life insurance? Surely if life insurers know that some occupations increase your probability of an earlier-than-normal death, then you’d expect a life insurance policy to cost more for those occupations… wouldn’t you?

Well, the answer to this question is “yes and no”. Let me explain.

Yes for ‘accidental’ risks associated with your occupation

Insurance companies always ask if you work in a ‘risky’ occupation. Most insurers will have a definitive list of what’s risky and their lists are very similar. In fact, most dangerous occupations are pretty obvious... a bomb disposal expert… a professional hunter… a professional mountaineer… an off-shore oil rig worker… etc. If your occupation is one of these, expect that your life insurance premiums will be loaded (offered at a higher price) or excluded from cover. This is normal practice. The basis of the loading or exclusion is that you are at much higher risk, statistically than the average of the population, to die in a work-related accident.

No for ‘health’ risks associated with your occupation

Insurers don’t ask questions regarding the health risks associated with your occupation. According to the Sunday Star Times article, hairdressers, textile workers, painters and cleaners (amongst others) are at higher risk of contracting a cancer-related illness than the general population. So in theory, life insurers should ask questions that identify these occupations and they should charge higher premiums for them. But, they don’t.

So… when it comes to identifying how risky your occupation is, insurers only focus on accident-related risks and not health-related risks. Hmm..

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