Pre-existing illnesses, smoking and obesity can make life insurance carriers leery about offering life insurance coverage to you. In these cases, the hesitance makes sense, because those circumstances may increase your risk of dying -- and of the carrier having to pay a claim.
But a job or hobby that carriers consider “high risk” also can leave you in the lurch when it comes to life insurance, meaning you end up paying higher premiums or you can't obtain coverage at all.
Danger at work
The jobs that life insurance companies deem the most dangerous happen to coincide with many of those that the U.S. Bureau of Labor Statistics found carry the highest rates of job-related accidents and deaths:
1. Underground miner. Forty-one underground coal miners died in the United States in 2010, according to the federal Mine Safety and Health Administration.
2. Private or commercial pilot.
4. Farmer or rancher (in some regions).
5. Construction worker. Work that involves structural steel or highway construction earns the "high risk" label, but more traditional construction (such as homebuilding) does not.
6. Offshore oil rig worker. Onshore rig or refinery workers are in the clear, says Michelle Oliver, an insurance broker with The Oliver Financial Group in Richmond, Va.
7. Offshore commercial fisherman. Just about anyone working in a small boat gets tagged as high risk. But there are some cases when even if you’re toiling away on a big boat (such as a crab fishermen), you still could be labeled high risk. If you're fishing anywhere but offshore, Oliver says you're in calm waters.
8. Police officer. Municipal police officers are not high risk unless they belong to a specialunit likeabomb squad or SWAT team. State troopers and sheriff's deputies may be rated high risk, depending on your state’s regulations.
9. Firefighter. Municipal firefighters are not deemed high risk, but Oliver says firefighters who work in mines or on oil rigs may fall into that category.
High-risk workers, and as well as those whose jobs aren’t dangerous, typically are offered life insurance through their employers. For instance, most coal miners are offered life insurance through the coal companies that employ them, says Phil Smith, a spokesman for the United Mine Workers of America.
But in many instances, those policies don’t provide enough coverage. Most offer one to three times a worker’s annual salary, and it’s not uncommon to want to leave your family a larger sum to cover living expenses -- especially if you have young children. If that's the case, you'll need to shop around for an individual life insurance plan that supplements your employer-sponsored policy.
Danger at play
As for hobbies, which ones are the riskiest in the eyes of a life insurer? According to Oliver, the Virginia broker, and Craig Hyldahl, a spokesman for AXA Advisors, they are:
1. Amateur race car driving.
2. Hang gliding.
4. Mountain or rock climbing.
5. Skydiving. According to dropzone.com, 450 skydivers around the world died from 2004 through 2010.
Consumers are rated high risk when an insurance carrier thinks the chances of paying a claim are greater than average -- namely if there's something in your daily life that boosts the odds that you'll die.
The high-risk designation affects each type of insurance (auto, home, health or life) a bit differently.
Hyldahl, the AXA Advisors spokesman, says being labeled high risk in terms of life insurance can result in one or all of these scenarios:
• An increase in your premium for the life of the policy or for a limited period of time.
• An outright rejection of coverage.
• A decline on a specific rider. For example, if you have a high-risk occupation, you may be able to obtain life insurance (and not even be rated high risk), but your job could cause you to be declined for what's known as a waiver of premium, which sets aside your obligation to pay premiums if you become seriously ill or disabled because of your job.
“Some occupations have an increased risk for dying on the job, because these occupations areobviously considered hazardous,” Oliver says.
So, what’s a high-risk worker to do if he can't quit his job or change professions but wants to buy life insurance?
“You may be able to request an exclusion to keep your rates down,” Oliver says. “That means if death occurs as a result of the job listed as the exclusion, benefits won’t be paid to survivors.”
For instance, a pilot could request an aviation exclusion. Unless is a passenger on a regularly scheduled flight for personal (not business) travel, the pilot would not be covered for any air-related claims.
But beware. A death-defying job isn’t the only thing that can land you on the high-risk list.
“Extreme hobbies may leave you labeled high risk and, as a result, paying higher rates than an individual who does not engage in these high-risk activities,” Hyldahl says.
Whether your hobby prompts a life insurer to classify you as high risk depends on the company. Most insurers factor in how often you participate in a dangerous hobby and where you engage in that hobby, and even consider variables like how fast you drive a race car or how far you fall when you're bungee jumping.
The price of high risk
Dangerous jobs and thrilling hobbies are likely to leave your wallet hurting.
If your job, hobby or health lead to a high-risk rating, Oliver says you should expect to pay premiums that are anywhere from $2 to $5 more for every $1,000 worth of life insurance coverage. For a $100,000 life insurance policy, that could tack on as much as $500 to your annual premium. Keep in mind that this figure varies by insurer.
“Depending on the occupation, that could add up to someone with a high-risk rating paying up to four times what someone rated 'preferred' or 'low risk' pays,” Hyldahl says.