Critical illness insurance and occupations ?
November 21st, 2008One company may regard a minor thrombosis lightly and require no extra premium, while another may take it much more seriously. Although most offices today adopt a reasonable attitude to underwriting requirements, anyone with an impairment needs the advice of someone familiar with the attitudes of different life offices and capable of selecting the one that is suitable.
The occupation of the critical illness insurance proposer normally has no bearing on the rate of premium, but there are a few occupations which through experience companies have found to have a higher mortality rate and for which a higher premium may be charged. These include miners, deep-sea divers, publicans, steeplechase jockeys and steeplejacks. (In peacetime, members of the armed forces are normally accepted at standard rates unless they are, say, aircrew, bomb disposal squad, or are likely to be posted to a political troublespot.) The extra premium charged in any of the above cases varies from company to company. The loading will amount to a substantial percentage on pure critical illness-protection policies but to a much smaller one on with-profit policies.
It should be added, however, that if a critical illness insurance policy is taken out while the proposer is in a non-risky occupation then the office has no power to raise the premium if he later moves to a risky one. Leisure activities pursued by the proposer may also add to the risk involved for the critical insurance office. Flying, gliding, rally driving and mountaineering are among those that some offices will regard as requiring an addition to the normal premium.
As an alternative to an extra premium, an office may agree to apply a “debt” to a policy and this means that in the event of death they will deduct an amount from the sum assured; this amount may be fixed or it may reduce year by year over a fixed term. In effect, a proposer backs himself against the underwriter’s judgement. While this solution may be practicable under an investment contract, it is not to be recommended under a critical illness insurance policy.
