Life Insurance for High-Risk Jobs: Your Costs and Coverage Options

How Insurers Determine Risk

When you apply for life insurance, the insurance underwriters evaluate a number of factors, including:

Age
Gender
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.

Example:

Two 40-year-old men both apply for a $325,000 20-year term policy. One works in a high-risk job.

The man in the low-risk job gets a “Preferred Plus” rate, paying $20.65 per month.

The man in 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.

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.