Life Insurance: Defining High Coverage Needs

Life insurance is considered high risk when an individual is deemed to have an increased chance of dying prematurely. This could be due to a range of factors, including medical conditions, risky jobs or hobbies, age, gender, lifestyle choices, and family medical history. Insurers use these criteria to gauge the risk of insuring an individual and determine their premiums. High-risk applicants may have more limited options and pay higher premiums for their life insurance coverage. However, shopping around and working with experienced agents or brokers can help high-risk individuals find the best rates and suitable coverage for their needs.

High-risk jobs

Life insurance companies consider a variety of factors when assessing an applicant's risk level, including age, gender, job, medical history, and lifestyle choices. While different insurers may weigh these factors differently, certain jobs are widely considered high-risk due to their inherent dangers and potential impact on life expectancy. Here is a detailed overview of high-risk jobs and how they can affect life insurance prospects:

• Military Personnel: Those serving in the armed forces, especially in active-duty roles, face inherent risks to their safety. This includes not only combat situations but also training exercises and deployments in hazardous environments.
• Law Enforcement: Police officers and SWAT team members are exposed to dangerous situations, including violent crimes, high-speed chases, and close encounters with armed individuals.
• Commercial Pilots: Flying commercial aircraft comes with its own set of risks, and while accidents are rare, the potential consequences are significant.
• Refinery Workers: Working in refineries and similar industrial settings involves handling hazardous materials, heavy machinery, and potentially explosive substances, increasing the risk of accidents and long-term health issues.
• Delivery Drivers: Transporting hazardous materials or driving for extended periods increases the risk of road accidents, especially when coupled with factors like night driving or adverse weather conditions.
• Fishing and Hunting Workers: These professionals often work in remote wilderness areas, around bodies of water, and with live ammunition, making their occupation one of the deadliest in the United States.
• Loggers: Logging workers spend their days in isolated forests with challenging terrain, operating heavy machinery, and dealing with cumbersome materials. The transportation aspect, often on treacherous roads, further elevates the risk factor.
• Aircraft Pilots and Flight Engineers: This category includes pilots and cockpit crew of private airplanes and helicopters, which have a higher rate of accidents than commercial flights.
• Roofers: Roofers face an inherent risk of falls, which are a leading cause of workplace fatalities. Working with tools and materials, sometimes on steeply sloped roofs, increases the danger.
• Construction Trades: Construction workers face numerous risks, including falls from heights, working around heavy machinery, and constantly changing job site conditions. Underwater welding or derrick operations in oil, gas, and mining further amplify these risks.
• Refuse and Recyclable Material Collectors: Garbage and recycling collectors navigate city streets in all weather and lighting conditions, facing a high risk of being struck by vehicles.
• Truck Drivers and Salespeople: Driving for a living, especially long distances or for extended periods, increases the likelihood of road accidents. Truck drivers and salespeople who drive frequently fall into this high-risk category.
• Structural Iron and Steel Workers: These workers are responsible for erecting tall structures like stadiums and bridges, often using multiple cranes and heavy machinery at impressive heights, making falls a significant hazard.
• Farmers, Ranchers, and Agricultural Managers: Working with crops or livestock often involves operating heavy machinery and vehicles over rough terrain. Transportation-related accidents and congested worksites elevate the risk factor.
• Grounds Maintenance Workers: Similar to construction workers, they face a mix of fall risks from heights, multiple vehicles on their worksites, and other variables that contribute to a hazardous work environment.

It is important to note that the presence of a high-risk job does not automatically disqualify someone from obtaining life insurance. However, it may result in higher premiums or the need to explore alternative policy options. Additionally, some companies may consider low-risk factors in other areas of an applicant's life to balance out the high-risk occupation.

Serious medical conditions

Insurers analyse an individual's personal and family medical history when determining their risk level. Some common serious medical conditions that can lead to higher premiums include:

• Cancer
• Heart disease
• Stroke
• Cognitive disorders such as dementia or Alzheimer's
• Chronic respiratory diseases
• High cholesterol
• Diabetes
• Mental health conditions such as anxiety, depression, and stress

It is important to note that the impact of these conditions on life insurance premiums can vary between insurers. Some companies may offer coverage with standard premiums for certain conditions, while others may increase the premiums or even deny coverage. Additionally, proof of vigilant health care and management of these conditions can help reduce the risk level and potentially lower premiums. This includes following medical treatments, taking prescribed medications, maintaining a healthy diet, exercising regularly, and managing health conditions effectively.

While serious medical conditions can result in higher life insurance premiums, it is still possible for individuals with these conditions to obtain coverage. Shopping around and comparing rates from different insurers is crucial, as each company assesses risk differently. Working with an experienced agent who specialises in high-risk applicants can also help navigate the process and find the most suitable coverage.

Lifestyle choices

When applying for life insurance, individuals are asked to complete an application form and possibly a further specific questionnaire to provide details about their lifestyle choices and habits. These answers help insurance companies gauge the risk of insuring an individual and determine the premium cost. Here are some lifestyle choices that can impact life insurance premiums:

Smoking and Tobacco Use

One of the most significant lifestyle choices that affect life insurance premiums is smoking. Smokers are considered high-risk applicants due to the link between nicotine and tobacco use and various health conditions. Insurance companies typically classify applicants as smokers if they have used any cigarettes, cigars, pipes, or nicotine replacements within the last 12 months. This includes e-cigarettes, vapes, and nicotine patches. Smokers often pay significantly higher premiums than non-smokers, sometimes even more than twice as much for comparable coverage. Quitting smoking can help lower insurance premiums over time, as remaining smoke-free for a specified period may qualify individuals for lower rates.

Alcohol Consumption

Excessive alcohol consumption is another lifestyle factor that can lead to higher life insurance premiums. Alcohol misuse is a relevant risk factor, as it is a leading cause of premature death among working-age adults. UK government research highlights that alcohol misuse has overtaken several types of cancer as the biggest killer in this age group. Therefore, insurance companies may consider applicants who consume high levels of alcohol as high-risk and adjust their premiums accordingly.

Weight and Diet

Maintaining a healthy weight is crucial in determining life insurance premiums. Insurance companies consider an individual's weight and build, often assessed through body mass index (BMI) and waist or clothing size. A higher BMI, indicating obesity, can lead to increased premiums as it is associated with various health risks. On the other hand, a healthy BMI, ranging from 18.5 to 24.9, is generally considered favourable and can result in lower rates. Adopting a balanced diet and healthy eating habits can positively impact an individual's weight and overall health, potentially leading to more favourable insurance premiums.

High-Risk Activities and Hobbies

Participation in high-risk activities and extreme sports can significantly impact life insurance premiums. Hobbies such as mountain climbing, skydiving, rock climbing, racing, and scuba diving are considered hazardous by insurance companies. Applicants who engage in these activities may be classified as high-risk and face higher premiums. The frequency of participation and personal experience level in these activities can also influence the insurer's decision. Reducing involvement in such high-risk hobbies may help lower life insurance rates.

Driving Record

An individual's driving record is also taken into account when determining life insurance premiums. Insurance companies typically access Department of Motor Vehicles records to evaluate any concerning violations. While minor infractions may not significantly impact premiums, a history of serious violations, such as DUIs, can result in higher rates or even hinder the chances of obtaining coverage. Improving driving habits and maintaining a clean driving record for three to five years can lead to more favourable insurance premiums.

Family medical history

When applying for life insurance, you will be asked about your family's medical history. This is because certain medical conditions are genetic, and insurers want to understand your overall health and longevity.

If a single medical issue exists in your family, it is unlikely to impact your pricing or cause your application to be denied. However, if a pattern of health conditions exists, this could signal to the insurer that they need more information. For example, if your mother and sister have both had breast cancer, the insurer will likely request an Attending Physician Statement (APS) to better understand how your family's history might relate to you.

The most important factor in your life insurance application is your own health. However, if there is a strong pattern of mortality in your family, this could impact your life insurance rates. For example, if you are a woman with a history of breast cancer in your family, and your mother had it at a young age, that may affect your coverage and/or costs. Similarly, if a parent was treated for heart disease at a young age, this will present a higher level of risk than a parent who was first treated at an older age.

If you are still in contact with your family, it is recommended that you ask them about their medical history before applying for life insurance. This will help you answer the insurer's questions accurately. If you don't know your family's medical history, you won't be penalised, but you should always be honest.

Age

In general, the premium amount increases by about 8% to 10% for every year of age. This can be as low as 5% annually if you're in your 40s, and as high as 12% annually if you're over 50. For example, a 45-year-old man might pay an average of $1,125 per year for a new 20-year term policy with $1,000,000 of coverage. The same policy purchased at age 46 will cost $1,225, and $1,345 per year if purchased at age 47.

Life insurance rates for seniors can be cost-prohibitive, and many insurers stop issuing new life insurance policies to seniors over a certain age, usually around 80. A guaranteed life insurance policy might be one of the only options available to seniors, but these policies can be expensive and have low death benefit caps.

It's important to note that age is not the only factor influencing life insurance premiums. Other factors include health, gender, lifestyle choices, occupation, and medical history. However, age remains one of the most significant contributors to the cost of life insurance.

Frequently asked questions