We spend the majority of our time at work, so it makes sense that our occupation – and in some instances, even our job title – can affect the insurance premiums we pay for some forms of insurance.
“A job title or occupation class is one of the major factors used to determine what level of insurance you require,” explains Matthew Hawkins, financial adviser and director of Scanlon Richardson Financial Group. “Insurance companies look at the risk associated with any role. For example, sedentary or administration roles have a lower risk of injury so you pay lower premiums.”
Your occupation class affects the premium you pay on three types of insurance: total and permanent disablement (TPD) protection, income protection and car insurance.
TPD insurance pays out when you are unable to ever work again if you become totally and permanently disabled. The most common reasons for TPD claims in Australia are disease of the musculoskeletal system, mental illness, accidents, nervous system disorders and cancer.
Income protection pays you a monthly payment, up to 75 percent of your previous income, paid in the event that you cannot return to work after an accident, illness or major trauma.
Occupations considered to be high risk, and therefore likely to incur higher insurance premiums, are ones that require you to complete hazardous tasks, expose you to poisonous chemicals or unhealthy environments, expose you to diseases (for example, if you are a doctor or nurse), and can cause mental strain or stress.
The devil is in the detail
Within high-risk occupations, you will need to provide information on the level of risk you are exposed to – for example, if you work at heights, you will be asked the average height and amount of time you spend at that height. If you work on a fishing boat, you will have to specify the size of the boat and the geographical locations in which you fish.
If you work in construction, a qualified builder pays lower premiums than a bricklayer but after approximately four years in the industry, a bricklayer can rise to the status of a qualified builder. “You can gain qualification by virtue of time in the industry,” Hawkins explains.
Similarly, in the non-manual sector, the time you’ve been in an occupation can reduce your premiums. “A financial adviser who meets certain requirements and is on a minimum salary of $100,000 and at least four years in the industry, will pay lower premiums than someone who is coming into the industry on a salary of $60,000,” Hawkins adds.
The reason for that, he explains, is that insurers also take into consideration the risk of you changing jobs – the longer you’ve been doing something, the greater the likelihood of you staying in the profession. Your job title also plays a role for exactly the same reason – the more senior the title, the more entrenched you are in your profession.
When it comes to car insurance, the times you drive to work – for example, at night when you are at a greater risk of being in an accident – also affects your insurance premium.