Life insurance and high risk activities
Life insurance companies have made a science out of estimating your life expectancy and then charging you enough money to make a minimum guaranteed payment should you die, leaving enough to cover their costs and make a profit. So their business is all about assessing risks. It should therefore be obvious that, if you walk a few yards from a pleasant home, through a safe area, to work in a quiet office, you're engaged in relatively low risk activities. But if you drive down a busy interstate to work underground with explosives, this is higher risk. Perhaps not surprisingly, insurers have put together lists of occupations and activities they classify as high risk. If you happen to fall into one of these listed occupations or activities, the reaction of the life insurance companies will vary from immediate rejection, to offering you cover at a high annual premium rate, to a calm discussion of what might be made available at an affordable price. Needless to say, the general insurers are likely to want you to disappear, whereas those with experience of insuring higher risk individuals are more likely to talk with you.
High risk occupations
This is a list of the factors that may influence the risk classification:
- you work offshore in the oil or gas industry, or as a diver, or in immigration control;
- you work underground in civil construction, e.g. tunneling or excavating storage facilities, or as a miner;
- you work high off the ground where there's a chance of falling, e.g, in the construction of tall buildings, cleaning their windows, etc.;
- you work with dangerous chemicals or explosives;
- the physical processes undertaken in your workplace are potentially dangerous, e.g. oil refinery and storage;
- your work involves the use of firearms or other weapons;
- your work in a capacity that may take you to war zones or other areas where there's a risk of civil disorder, e.g. you're a journalist, photographer, etc.
This is likely to include groups as diverse as firefighters and professional sportsmen who are required to crash into each other, risking head injuries.
High risk hobbies and sports
At an amateur level, the following would give cause for concern if carried out on a regular basis. Life insurance companies would not be concerned if, as a seventy year old granny, you fulfill a dream of skydiving as a duo with an experienced person in control:
- all thrill-seeking activities like bungee jumping, hang-gliding, and so on;
- x-game type skateboarding, rollerblading, and comparable skills;
- any type of racing;
- rock climbing or scuba diving.
In a way, lists like this are just common sense. If you fail to tell your life insurance company your work or hobby activities are dangerous, the insurer has the right to cancel the policy when it finds out. This includes refusing a claim. So even though it may cost you a higher premium, it's better to be honest from the outset.