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Buying life insurance for America’s most dangerous jobs

By: 
Ben Gran
Friday, November 16, 2012

Not all jobs are created equal. The U.S. Bureau of Labor Statistics rates occupations based on the rate of accidents and fatal on-the-job injuries, highlighting the most dangerous jobs in the country.
 
One of the top most dangerous jobs in the country is fishing. Fishermen run a high risk for death; for instance, they can be swept overboard by high waves.
 
Charles King worked in Alaska crab and halibut fisheries for more than two dozen years. Almost everyone who's worked in the fishing business knows someone who's fallen overboard or been on a boat that sank.
 
Higher risk, higher premiums?
 
With such a risky profession, you might think it'd be tough to get life insurance. But even if you work in one of America's most dangerous occupations, it's usually still possible to get life insurance – although it might come at an extra cost.
 
DuWayne Kilbo, a principal at Windsor Insurance in California, says that despite the popular impression that some jobs are "too risky" for life insurance coverage, having a high-risk occupation doesn't necessarily shut the door on coverage.
 
"Even if a job seems like it would be really risky, most life insurance companies won't rate adversely for these jobs," Kilbo says.
 
Risk assessment
 
Tony Steuer, United Policyholders' director of financial preparedness, says that for workers who do fall into the high-risk category – such as fishermen, structural steel workers, miners, loggers and offshore oil workers – life insurers may charge a higher premium to compensate for the greater occupational risks. Insurance companies rate various jobs as "high risk" based on reports like the U.S. Bureau of Labor Statistics' ranking of "deadliest" jobs, and on the experience of people they've insured before.
 
For example, if a life insurance company used to insure 1,000 offshore oil workers and two of them died in on-the-job accidents, the company might figure that offshore oil workers have a higher rate of death than workers, so the company might raise rates for other offshore oil workers.
 
"People in high-risk jobs can still get life insurance coverage, but the price of the insurance is going to reflect the higher risk," Steuer says.
 
Insurers must turn a profit to stay in business, so they manage their risks and limit the amount of money they pay in death benefits – they want to avoid taking on new customers if those customers are more likely to die. Thus, life insurers might set higher rates to cover the added risk.
 
Many life insurers charge a "flat extra" fee for high-risk occupations. Depending on the insurance company, that can translate to an extra $2.50 or so for every $1,000 of coverage. For example, an Alaska crab fisherman buying a $250,000 life insurance policy might have to fork over an additional $625 a year.
 
Life insurance options
 
Steuer says people in high-risk occupations might be better off buying group life insurance through an employer or a trade association rather than navigating the individual market on their own.
 
"There's usually a life insurance option for everyone, even in high-risk jobs," Steuer says. "For example, a police or fire department gets group coverage for employees. Loggers can get coverage through an association."
 
Keep in mind that different life insurers have different risk-rating practices, so it pays to shop around if you're in the market for life insurance and are in a high-risk occupation. "Do your homework and do your own advocacy," Kilbo says.