Pre-existing illnesses, smoking and obesity can make life insurance carriers leery about offering life insurance coverage to you. In these cases, the hesitance makes sense, because those circumstances may increase your risk of dying — and of the carrier having to pay a claim.
But a job or hobby that carriers consider “high risk” also can leave you in the lurch when it comes to life insurance, meaning you end up paying higher premiums or you can’t obtain coverage at all.
Danger at work
People with certain occupations and hobbies may find themselves denied life insurance coverage because they’re deemed “high risk.”The jobs that life insurance companies deem the most dangerous happen to coincide with many of those that the U.S. Bureau of Labor Statistics found carry the highest rates of job-related accidents and deaths:
1. Underground miner. Forty-one underground coal miners died in the United States in 2010, according to the federal Mine Safety and Health Administration.
2. Private or commercial pilot.
3. Lumberman.
4. Farmer or rancher (in some regions).
5. Construction worker. Work that involves structural steel or highway construction earns the “high risk” label, but more traditional construction (such as homebuilding) does not.
6. Offshore oil rig worker. Onshore rig or refinery workers are in the clear, says Michelle Oliver, an insurance broker with The Oliver Financial Group in Richmond, Va.
7. Offshore commercial fisherman. Just about anyone working in a small boat gets tagged as high risk. But there are some cases when even if you’re toiling away on a big boat (such as a crab fishermen), you still could be labeled high risk. If you’re fishing anywhere but offshore, Oliver says you’re in calm waters.
8. Police officer. Municipal police officers are not high risk unless they belong to a special unit like a bomb squad or SWAT team. State troopers and sheriff’s deputies may be rated high risk, depending on your state’s regulations.
9. Firefighter. Municipal firefighters are not deemed high risk, but Oliver says firefighters who work in mines or on oil rigs may fall into that category.
High-risk workers, and as well as those whose jobs aren’t dangerous, typically are offered life insurance through their employers. For instance, most coal miners are offered life insurance through the coal companies that employ them, says Phil Smith, a spokesman for the United Mine Workers of America.
But in many instances, those policies don’t provide enough coverage. Most offer one to three times a worker’s annual salary, and it’s not uncommon to want to leave your family a larger sum to cover living expenses — especially if you have young children. If that’s the case, you’ll need to shop around for an individual life insurance plan that supplements your employer-sponsored policy.
Danger at play
Underground miners face some of the biggest hurdles in obtaining life insurance.As for hobbies, which ones are the riskiest in the eyes of a life insurer? According to Oliver, the Virginia broker, and Craig Hyldahl, a spokesman for AXA Advisors, they are:
1. Amateur race car driving.
2. Hang gliding.
3. Bungee jumping.
4. Mountain or rock climbing.
5. Skydiving. According to dropzone.com, 450 skydivers around the world died from 2004 through 2010.
Defining risk
Consumers are rated high risk when an insurance carrier thinks the chances of paying a claim are greater than average — namely if there’s something in your daily life that boosts the odds that you’ll die.
The high-risk designation affects each type of insurance (auto, home, health or life) a bit differently.
Hyldahl, the AXA Advisors spokesman, says being labeled high risk in terms of life insurance can result in one or all of these scenarios:
• An increase in your premium for the life of the policy or for a limited period of time.
• An outright rejection of coverage.
• A decline on a specific rider. For example, if you have a high-risk occupation, you may be able to obtain life insurance (and not even be rated high risk), but your job could cause you to be declined for what’s known as a waiver of premium, which sets aside your obligation to pay premiums if you become seriously ill or disabled because of your job.
“Some occupations have an increased risk for dying on the job, because these occupations are obviously considered hazardous,” Oliver says.
Bungee jumping ranks as one of the riskiest hobbies for someone seeking life insurance.So, what’s a high-risk worker to do if he can’t quit his job or change professions but wants to buy life insurance?
“You may be able to request an exclusion to keep your rates down,” Oliver says. “That means if death occurs as a result of the job listed as the exclusion, benefits won’t be paid to survivors.”
For instance, a pilot could request an aviation exclusion. Unless is a passenger on a regularly scheduled flight for personal (not business) travel, the pilot would not be covered for any air-related claims.
But beware. A death-defying job isn’t the only thing that can land you on the high-risk list.
“Extreme hobbies may leave you labeled high risk and, as a result, paying higher rates than an individual who does not engage in these high-risk activities,” Hyldahl says.
Whether your hobby prompts a life insurer to classify you as high risk depends on the company. Most insurers factor in how often you participate in a dangerous hobby and where you engage in that hobby, and even consider variables like how fast you drive a race car or how far you fall when you’re bungee jumping.
The price of high risk
Dangerous jobs and thrilling hobbies are likely to leave your wallet hurting.
If your job, hobby or health lead to a high-risk rating, Oliver says you should expect to pay premiums that are anywhere from $2 to $5 more for every $1,000 worth of life insurance coverage. For a $100,000 life insurance policy, that could tack on as much as $500 to your annual premium. Keep in mind that this figure varies by insurer.
“Depending on the occupation, that could add up to someone with a high-risk rating paying up to four times what someone rated ‘preferred’ or ‘low risk’ pays,” Hyldahl says.
–Gina Roberts-Grey
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Filed under insurance by on Mar 4th, 2011. Comment. 
Hoarders have another reason to get help: Being a hoarder could hinder the ability to get or keep homeowner’s insurance.
The potential pitfalls in the homes of hoarders — people who can’t stop acquiring items and have a hard time getting rid of their belongings — include fire and injury. As a result, hoarders are at a higher risk in the eyes of a home insurer, says Loretta Worters, vice president of the Insurance Information Institute.
The numbers of hoarders is growing, making the link between hoarding and homeowner’s insurance a more pertinent issue that could affect you, your family, your friends or your neighbors.
Jeff Szymanski, executive director of the International OCD Foundation, says the hidden disorder of hoarding has come to light since 1993, with more research and education about the condition. Although it’s difficult to determine how many people are affected by the disorder, he says estimates of 5 million hoarders in the U.S. appear to be accurate.
A cluttered garage can contribute to the fire hazards in a hoarder’s home.Homeowner’s insurance is important to hoarders who want to protect their belongings, but Szymanski says the condition is so debilitating that some can’t set priorities and struggle with decision-making.
“They understand the value of homeowner’s insurance,” he says. “They can’t act on it because there are too many other things that feel equally urgent to them.”
Hoarders’ cluttered homes often are the focal point for the condition as their stuff takes over their residences. Hoarding homeowners:
• Can’t use entryways or rooms. “They can’t cook in the kitchen. They can’t eat at the kitchen table,” Szymanski says. “The level of clutter in their house is really impairing their ability to do day-to-day functioning.”
• Fill their attics to the point of potential collapse. An accumulation of boxes as well as newspapers and books — the most commonly hoarded items — can lead to severe stress on structural components, Worters says. The floor systems can sag, crack or even collapse, causing damage to a home and its occupants.
Getting and keeping insurance
Stacks of books and newspapers are common sights in the homes of hoarders.TV shows like “Hoarders” have brought greater attention to the condition. But even when “hoarder” wasn’t a frequently used term, Nicki Kopassis, an agent with Farmers Insurance in Virginia Beach, Va., remembers visiting a home where the yard was crammed with so many items that liability concerns prevented a policy from being written.
But insurers often don’t know whether a person is a hoarder because the insurers’ representatives usually don’t inspect a home’s interior before an insurance policy is written, Worters says. If the outside looks OK, a hoarder homeowner could obtain insurance, even if piles of junk fill the interior.
When homeowner’s insurance policies are written or denied, or when a claim is made, no category designates the policyholder as a hoarder. But in the case of a claim, an insurance adjuster would visit the home and then notify the agent if the condition of the property is poor enough for the policy not to be renewed, Kopassis says.
“While contracts do not exclude hoarding, the policy most likely would be non-renewed, or you would pay a higher premium,” Worters says.
Four reasons for risk
Here are four key reasons why hoarders are a higher risk for homeowner’s insurers:
1. Fire. The accumulation of materials around the home could increase the risk of a blaze, Worters says. The top causes of fires are related to cooking, heating and electricity. In the kitchen, an accumulation of grease, food items and trash increases the potential for a fire. Paper or other flammable materials near heating systems or electrical wires boost the risk of fire, but also burn quickly, which could cause extensive damage, Worters says.
2. Liability. If a friend or family member is injured in a hoarder’s home, a claim could be filed against the homeowner’s policy. The possibility for injury is one of the reasons why it’s common for hoarders to have their homes condemned, Szymanski says.
3. Blocked exits. Possessions that obstruct or block exits could it more difficult to escape during an emergency and more difficult for public safety personnel to enter a home. Szymanski says he recently talked with a daughter whose mother, in her 60s, recently broke her leg crawling in and out of her home through her bedroom window because too much clutter was blocking a door.
4. Poor maintenance. Hoarders are likely to ignore or delay fixing electrical or heating issues, plumbing problems and roof repairs, which can lead to a greater number of claims, Worters says. In many hoarding cases, the heating equipment no longer functions because of blocked vents or equipment. She says occupants will use kerosene or space heaters, which create an immediate fire hazard because they usually are placed amid newspapers and other combustible materials.
–Lori Johnston
Filed under insurance by on Jan 26th, 2011. Comment.
Medical payments policies cover the cost of your medical expenses after a car accident. This coverage applies to the insured driver, his or her passengers, and even pedestrians hit by the policyholder.
PIP is similar to medical payments coverage, but also covers lost wages and rehabilitation expenses.
Because PIP provides an added value it is generally more expensive than medical payments coverage. However, the price difference varies by company and state, says Kevin Lynch, an associate professor of insurance at The American College in Bryn Mawr, Pa.
Some states require drivers to purchase a minimum amount of this type of health insurance coverage. In other states, the coverage is optional.
If your state gives you a choice for coverage, you can ultimately decide if the insurance is worthwhile or a waste of money.
If your state requires this coverage, you must decide if you want to purchase the minimum amount required by law or pay for higher levels of coverage.
If you already have health insurance, medical payments coverage – and the medical coverage portion of PIP – may be redundant, says Lynch.
Even so, it could still be a worthwhile purchase, because “your having health insurance is not going to benefit other people in your car if you have an accident,” especially if they don’t have health insurance, says Lynch. Medical payments coverage can help cover those bills.
In addition, even if you have health insurance, it may not cover all your expenses related to an accident. These costs include deductibles, dental treatments and even funeral bills. Medical payments insurance may pay for those fees.
PIP also may be redundant. Then again, PIP offers benefits beyond simple health coverage.
What if injuries from a car wreck prevent you from working? You’d want personal injury (PIP) coverage reimburse a percentage of your lost wages, says Lynch.
Short-term and long-term disability policies could help you make up for lost income, but they are taxable benefits and are usually received as less than 100 percent of your normal wages, says Lynch.
“The PIP coverage is a nontaxable payment and would help you in making up for the difference in lost wages,” he says.
Lost income, even for just a few weeks, can severely impact people’s finances, says Brooks Gregory, a financial adviser with Peachtree Planning in Atlanta.
For that reason, he generally suggests getting the extra insurance. If you can purchase PIP and medical coverage auto insurance inexpensively, it can help protect you in a worst-case scenario, says Gregory.
“It’s not the type of coverage that someone needs to get overly excessive with, but for small health claims related to a car accident, it is a great benefit to have,” he says.
Adding higher levels of PIP and medical payments coverage will hike the premiums on your car insurance policy. Coverage amounts typically range from $1,000 up to $10,000, says Lynch.
“Let’s say you’re an over 25-year-old male driving a relatively new car, and your policy for six months is going to be $600,” Lynch says. “Of that $600, you’re probably talking about 50 bucks of it having to go to PIP or medical payments coverage.”
That $50 could typically get you about $5,000 worth of PIP coverage, or $10,000 worth of medical payments coverage, based on your driving record, says Lynch.
Such a relatively small payment could be a smart investment. According to the Insurance Institute for Highway Safety, the average loss payment for personal injury protection claims in a one-month period was $4,950 (for 2006-08 model passenger cars).
To understand what your requirements are, determine how much coverage you need and decide if state minimum requirements match your needs, it’s best to speak to an insurance agent about your individual situation, Lynch says.
Filed under insurance by on Jan 23rd, 2011. Comment.