Rajeev Dhule (26) was frowning with concern while talking to the insurance agent about creating a life insurance plan. “I will be charged more than my friend Aditya because I am a pilot and he is a software engineer?” he re-confirmed. “Yes, sir. I am sorry,” responded the insurance agent sadly, “that is the usual policy followed by all insurance providers. Your job is riskier than that of a person working in an office and hence the premium will be higher.”

Yes. Your profession can impact the amount of premium you are charged.

What Is an Insurance Premium?

Insurance companies charge you a pre-decided amount in exchange for the coverage they provide. Depending on the plan and the option you choose, you can pay the premium monthly/quarterly/ half-yearly/annually or as a one-time lump sum amount.

The premium is based on many factors like your age, insurance cover, type of coverage and maturity period. For example, an auto insurance might be cheaper than a life plan, if you are young and have no illnesses.

There is a whole body of knowledge called actuarial sciences that is built around the measurement and management of risk and uncertainty. Using the tools of actuarial science, the people creating insurance policies consider many factors while deciding premium values and one of the factors that affects the premium amount is your profession.

Risky professions

The reason for including professions in deciding premium amounts is quite simple. Not all professions provide safe working conditions with air-conditioned rooms and ergonomic chairs and a walk no further than the water cooler.

Some professions are inherently more stressful than others. As a commercial pilot Rajeev Dhule would face more risks as compared to a software engineer working from his cabin or a librarian working in a State Library.

According to the Directorate General Factory Advice Service & Labour Institutes (DGFASLI), on average1 1,109 deaths and more than 4,000 injuries in registered factories were reported each year, in four years to 2020. If you work in a factory then it could affect your life insurance premium.

As risk is an important consideration when deciding on insurance premiums. The higher the risk, the higher the premium. Not only pilots and factory workers but professions in the following sectors are considered risky by insurance companies

  • Aviation jobs: This includes both commercial and private pilots, as well as those who fly for fun.
  • Military: Typically, active military personnel do not get life cover from private companies and the armed forces provide their own insurance cover
  • Natural resources workers: People working in the oil and gas industry, mining sector, quarrying industry and marine, lumber industry, or fishing industry are also considered to be high risk
  • Firefighters or law enforcement officers: Not every law enforcement officer will get the same hike in premium. It usually depends on your nature of work comes into play here. For e.g., if you have an administrative job in law enforcement it will not affect your premium, but if you are part of the bomb squad then it will
  • Construction labour/Electric powerline installation and maintenance: Jobs requiring skill and proximity to dangerous or risky environments will also see an increase in premium
  • Bartenders: Some policies consider bartending a high-risk job too.

Is there a uniform code?

The exact list of what jobs are risky will vary from one insurer to the next. Plus, some insurers might have policies suited to a specific sector like the army. However, the rule of thumb is that most of the risky professions will incur a higher premium because a risky profession increases the chances of pay outdue to death.

How do I know the additional premium my job requires?

There is no exact formula that can predict your premium. Premiums vary across insurance providers and their policies.

The best way to find out more details and make a more informed decision is to quickly meet with our trusted financial advisors just like Rajeev Dhule did. It will save you time and get you in contact with people who know more about insurance policies and who can help you choose the ones that work best for your specific needs.