YOU ASK:

Will your existing disability insurance premium change if your new job is in a higher risk class?

WE ANSWER:

It depends on what your existing disability insurance stipulates in the contract. Usually, the policy's terms and conditions would state what would happen if you change jobs and it is in a higher risk class.

  • Guaranteed non-cancellable and renewable.

    There are some disability insurance policies that are guaranteed renewable and non-cancellable. For these types of disability insurance policies, the insurance company cannot change the premium amounts, nor can it cancel the policy, for as long as premiums are paid. Even if you shift to an occupation that is deemed to be at higher risk, your premiums will remain the same.

  • Guaranteed renewable.

    If the policy is only guaranteed renewable, the insurance company has the option of increasing the rates. It cannot, however, cancel the policy as long as you continue to pay for the premiums.

  • Changes in work status.

    Other reasons for changes in the premiums may include increases in the salary, since your expected disability benefits will also increase once the policy is renewed. Your premiums may also change if your number of work hours change. If you shift from full-time to part-time status, this will be reflected when the policy is renewed, even if you are already working part-time.

There are usually 5 occupational classes used when considering your premiums for disability insurance (from the highest risk class to the lowest):

  • Unskilled laborers (including farm workers and other jobs that involve unskilled manual labor)
  • Skilled manual laborers as well as semi-skilled laborers and tradesmen
  • People working on the field, such as salespersons and supervisors
  • Skilled office workers, including executives and managers
  • Professional workers (such as accountants, doctors and dentists)

Professional workers are considered the highest (best) occupational classes.

If you move from one occupational class to another, you should inform your insurance company about this to avoid complications when it is time for you to make a claim.

Now, if the changes are caused by the fact that you transferred employment, your new employer's disability insurance will immediately reflect your current occupational class and charge you the corresponding premiums.

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