Your cost for disability insurance is determined by many factors – like your age, gender, and tobacco use. But, the biggest determinant of your premium is your occupation. Insurance companies base their rates on the amount of risk they’re assuming – the greater the risk associated with an occupation, the higher the rate.
For example, a construction worker whose job involves outdoor labor on skyscrapers will pay more for disability insurance than someone who spends their entire workday in an office. Their “occupation class” will be different.
Here, we cover everything you need to know about occupation classes for disability insurance:
Read on to learn more.
What is a disability insurance occupation class?
Disability insurance companies group different occupations into something called an “occupation class.” Every job belongs to an occupation class. Jobs considered low-risk by an insurer are placed in certain classes, while jobs the insurer deems high-risk are joined together in others. The class your occupation falls under determines your disability insurance premiums.
Occupation class not only affects your premiums, it can also determine which riders you can add to your policy. Some riders, like own-occupation and residual disability riders, are only available to higher occupation classes.
Your occupation class can also directly affect the maximum monthly benefit the insurer will allow you to buy. For example, jobs placed into occupational class 4A (low risk) may be able to buy up to a $25,000 monthly income benefit, while those placed in class B (high risk) can only purchase a monthly income benefit of $4,000.
Generally, someone with a job in a higher occupation class has a lower risk of becoming disabled, requires a higher level of education, and has a higher income. Conversely, jobs that require more physical labor and lower skill levels are placed into lower occupation classes.
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What are the different occupation classes for disability insurance?
Most companies offer five different occupation classes, ranging from least risky to most risky: 4A, 3A, 2A, A, and B. Some also have class C, which includes jobs considered more dangerous than class B.
Some jobs are considered uninsurable and don’t fall into any of the occupation classes. These can be jobs considered very high-risk, like being a circus performer or skydiving instructor, or jobs that have a high degree of instability, such as actors, models, artists, etc.
It look at each class individually.
Occupation class 4A
Occupations in class 4A have the lowest degree of risk. Jobs belonging to this class are highly specialized and require many years of education and training. For example, medical professionals like doctors and dentists are rated as 4A.
These are some jobs insurance companies consider class 4A:
- Most engineers with consulting and office duties only
- Most executives with consulting and office duties only
Medical professionals, dental specialists, select professionals, and most executives with limited sales duties may pay lower rates than 4A, and they can also qualify for a higher maximum monthly benefit. Income verification is required to be eligible for this higher occupation class.
Occupation class 3A
White-collar office, clerical, or light sales workers with no manual duties fall into the 3A class. Most executives and business owners directly involved in manufacturing, processing, or assembling a product or merchandise may be classified as a lower class than 3A. Here is a sample list of jobs belonging to class 3A:
- Administrative assistants
- Bank tellers and managers
- Mortgage brokers
- Occupational therapists
- Speech therapists
- Travel agents
Occupation class 2A
Skilled, specialized workers with more sales and manual duties fall under class 2A. This includes business owners whose responsibilities include supervising or inspecting plant operations. Here is a list of sample jobs insurance companies rate as 2A:
- Car salespeople
- Commercial realtors
- Computer technicians
- Event planners
- Farm owners
- Health inspectors
- Home inspectors
- Insurance adjusters
- Registered massage therapists
- Parole officers
- Salespeople and clerks with sales duties only
- Social workers
Occupation class A
Class A includes skilled manual workers in the lighter trades and industries. In addition, some unskilled workers with light duties and favorable working conditions would also be classified as class A. To qualify, their working conditions must not have any hazards from heat, chemicals, explosives, or heavy equipment/machinery.
Here are some jobs that insurance companies consider class A:
- Bus drivers
- Law enforcement officers
- Car mechanics
- Dog trainers
- Driving instructors
- Mental health counselors
- Music teachers working from home
- Property managers
- Registered nursing assistant
- Residential realtors
- Unarmed security guards
Occupation class B
Certain professions require heavy physical labor and carry the highest risk of filing a disability claim. Unskilled or manual laborers, heavy equipment operators, and those working in extreme heat and humidity would fall under class B. Here are some other jobs that belong to class B:
- Ambulance drivers
- Armed security guards
- Barbers and hairdressers
- Cement and concrete workers
- Cleaners and janitors
- Drivers (long-haul or heavy vehicle)
- Forklift and heavy equipment operators
- Garbage truck drivers
- Personal trainers
- Police officers
- Prison guards
- Swimming instructors
- Yoga instructors
Some jobs aren’t listed in an occupational class schedule. Instead, insurers use the job duties and the percentage of time spent performing those duties to determine their class.
Disability insurance companies are concerned with duties, not job titles. General terms like salesperson, clerk, or executive don’t help an insurer determine what a worker does and what their risk exposure is.
Does changing jobs change your disability insurance occupation class?
As you progress in your career, you may work in a new occupation that is less risky than your previous one. For example, you may be promoted from being a manual laborer with a construction company to a foreman with strictly supervisory responsibilities. Notifying the insurance company of your job change may move you into a higher occupation class and lower your rates.
Different insurers have different disability insurance occupation classes
Many jobs don’t fit neatly into an insurance company’s list of occupations. Business owners and self-employed individuals often wear many hats and perform many different duties. Working with an independent insurance agent can help you get quotes from several insurance companies and help you find the company that will give you the best rates and benefits.
The information and content provided herein is for educational purposes only, and should not be considered legal, tax, investment, or financial advice, recommendation, or endorsement. Breeze does not guarantee the accuracy, completeness, reliability or usefulness of any testimonials, opinions, advice, product or service offers, or other information provided here by third parties. Individuals are encouraged to seek advice from their own tax or legal counsel.