Risky lifestyle and life insurance

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Risky occupations and activities more often than not increase the cost of life insurance premiums. Why is this, and how do insurers determine how much to charge customers for perceived 'risky' activity or 'risky' status?

Whether someone is working in a 'hazardous' job or participating in 'hazardous' activities and pursuits, an insurer may decide to apply a loading to the normal premium, decline to insure or in certain circumstances exclude an activity from the cover entirely.

Check terms carefully

Unlike the loadings applied to a premium due to other risks such as adverse medical conditions (where the standard premium could be doubled), an occupational or activity loading tends to be reflected in an additional amount per month per £1000 worth of cover.

It's important to be aware that the terms offered by different insurers may vary considerably.

Any increases to premiums will reflect the increased risk that the insurer may have to pay out on a claim. Occupations which involve working at heights, deep sea fisherman, oil rig workers, members of the armed forces and even commercial drivers are likely to attract a higher premium.

The insurer will not only look at the occupation itself but the working environment as well. For example, a construction worker in the UK is unlikely to attract a huge increase to their premium.

It's not just what you do, it's where you are

However, the same worker based for six months of the year in Africa or the Middle East can expect a vastly increased premium. At the far end of the scale, if you work in areas such as Iraq, the likelihood of achieve cover is highly unlikely.

Activities likely to attract a premium loading include mountaineering, pot holing, deep sea diving, motor sports, flying light aircraft or gliding, hand gliding etc. Again, it must be stressed that terms will vary across the market, so it's worth seeking expert independent advice.

The cheaper option