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How Your Occupation Affects Your Income Protection Insurance


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Most of us are at work for at least a third of our lifetimes (as if you could forget!), and our occupation has a significant impact on the likelihood of needing to make an income protection insurance claim. As such, life insurance companies usually use an occupation category or code as a factor in determining your premiums. Today we explore those occupation codes and the logic behind them a little more carefully.

What occupation categories exist?

This varies immensely by insurer. Some income protection companies have only 3 occupational categories, some have as many as 8. For instance, you might have to choose between:

  • Manual
  • Skilled Tradeperson
  • Non-manual

Or you might have to be more specific about your skills and experience:

  • Professional white collar workers whose job requires tertiary qualifications
  • Medical and allied health professionals
  • Clerical or administrative workers
  • Light manual workers (for example, supervisors of manual workers)
  • Fully qualified skilled tradespeople
  • Unqualified tradespeople doing light or medium manual work
  • Unqualified tradespeople doing heavy manual work
  • Home duties
  • Accountants are sometimes classified separately

What aspects of my income insurance does my occupation affect?

The most notable difference in income insurance between different occupations is the premium. However, there are also other factors that may be affected:

  • Some occupational classes may not be eligible for as long benefit periods - for example, an income protection insurance plan might only offer a 2 or 5 year benefit for manual labourers compared to what is offered for office workers
  • The maximum entry age may differ - if you're a heavy manual labourer you may only be able to get cover before a certain age, however this generally depends on the insurer.
  • Some income protection insurance policies place more stringent ‘disablement’ requirements on occupation categories that trend towards manual labour. For example some insurers will pay certain occupations a benefit after the selected waiting period if they are either partially or totally disabled, whereas other occupations will only receive a benefit if they are totally disabled.
  • There may be different maximum sums insured for different occupational categories

With all these points in mind, it is therefore best to talk to a financial adviser to find the most suitable income protection insurance policy for your situation.

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