Life Insurance for Construction Workers

As a construction worker, you need life insurance to secure the financial future of their dependents, just like anyone else.

However, since construction is generally seen as a high-risk industry, you will have to answer additional questions about your job duties during the underwriting process. Luckily, there are many insurance options available.

Depending on the specifics of your profession (and other factors like age, medical history, and lifestyle risk factors), you may have to pay a highly monthly rate.

If you are employed in the construction industry, here’s what to know about life insurance for construction workers. 

Key Takeaways:

• Construction workers have access to the same life insurance options as someone with a low-risk desk job
• It is possible to get preferred rates if you are a construction worker, but those with exposure to serious work hazards may be limited to a standard health classification
• Different Canadian life insurance companies rate construction workers differently, so shopping around can help you save money

Understanding the Risks of the Construction Industry

When someone applies for life insurance, the insurer considers their risk of death to determine their insurability and premium rate. Since construction accidents are not uncommon, life insurance companies may rate a construction worker less favorably than someone with a low-risk desk job.

Some of the common work hazards insurers may take into account when underwriting construction workers include: 

• Electrocution
• Falls
• Exposure to harmful materials
• Equipment accidents
• Transportation accidents

However, not all construction workers have the same level of risk. During the underwriting process, the insurer will assess the work hazards that specifically affect you. 

How Do Life Insurance Companies View Construction Workers?

It’s common for life insurance companies to ask applicants questions regarding your employment and job duties. You may also have to answer questions related to your work environment.

As part of the underwriting process, some of the common questions you can expect are: 

• What are your everyday job duties and responsibilities?
• What type of power tools and machinery you use on a regular basis?
• What are the safety protocols in place?
• Do you have any professional licenses?
• How many hours a week you work on average? 

Depending on the specific details of your job and other factors (like age, health, family medical history, and lifestyle choices), insurance companies may or may not view your application as an increased risk. It is possible to obtain a preferred health classification as a construction worker, especially if you have a management job or are a civil engineer.

Onsite construction workers, on the other hand, may be limited to a Standard rating. If your job exposes you to a variety of work hazards, insurers may approve you with a Table rating (premiums anywhere between 25% and 250% higher than the Standard rate) or even turn down your application. 

When applying for life insurance, it’s important you answer all the questions the application form truthfully. Lying or withholding information on the application form and can lead to coverage denial or a void policy.

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How to Improve your chances of getting approved

There are several things you can do to increase your odds for qualifying for coverage at a reasonable price. 

1. Improve your health: Adopting healthier habits, like regular physical activity, healthy eating, avoiding smoking and heavy alcohol consumption, can protect you from serious health problems and improve your chances of getting approved for life insurance. 
2. Shop around: The specific details of your job and other factors will determine insurability. Each insurance company weighs these factors differently. So even if your application is turned down by one insurer, there’s a good chance another company may be willing to write you a policy. 
3. Work with an experienced, independent broker: Some life insurance companies may rate construction workers more favorably than others. An experienced broker can help you apply for coverage with these providers, thereby improving your chances of success. 

Types of Life Insurance for Construction Workers

Construction workers who are in reasonably good health can buy any type of life insurance policy. However, you may have to pay more for coverage, depending on the specific details of their job. On the other hand, if you are a construction worker with multiple underlying conditions, your options for life insurance may be limited to guaranteed issue life insurance. 

Broadly speaking, there are five main types of life insurance. While each of them provides financial assistance to your loved ones at a time they may need it the most, they are vastly different financial products. Learn more about them to determine which one might be a right fit for your family. 

Term Life Insurance

Best for: A good option for most people. It provides low-cost coverage for only as long as you need it. 

How it works: Term life insurance provides a cash lump sum for your family if you pass within a set period, known as the term of the policy. You can choose the length of time for which you want coverage. If you survive the term, no payout is made, though usually you have the option to renew the policy without new medical underwriting. Most people purchase term life insurance to provide protection to their loved ones during their prime working years. If they pass away early, the proceeds from their policy can help their surviving partner or spouse cover daily living expenses, pay off debts, and support their children through college. 

• Pros: Most cost-effective life insurance product
• Cons: If your survive the policy term, no benefit is paid

Whole Life Insurance

Best for: People who need lifelong coverage and/or want to use life insurance for retirement planning or estate planning.

How it works:  Whole life insurance is permanent life insurance and investment product rolled into one. Part of your premium goes toward covering the net cost of life insurance and administrative fees, while the other part is used for growing the cash value. The cash value grows on a tax-deferred basis, meaning you will pay tax only when you access it, not during the growing years. You can access it at any time while you are living. The policy beneficiary typically receives only the death benefit upon the insured’s death; any unused cash value is pocketed by the insurer. 

Pros:

• Provides coverage for as long as you live and accumulates cash value at a fixed rate 
• Comes with a high price tag

Universal Life Insurance

Best for: People who want a permanent life insurance policy that can adapt according to their changing needs. 

How it works: Universal life insurance plans typically allow you to raise or lower your premiums and the death benefit, within certain limits. The cash value growth is not fixed but rather based on the market rate or performance of linked investment sub-accounts chosen by you. These policies last your entire life, provided premiums are paid on time. 

Pros:

• Not as expensive as whole life insurance and gives you the freedom to adjust premiums and the death benefit as your life situation changes
• The cash value growth is not guaranteed

Simplified issue life insurance 

Best for: People who don’t want to undergo the life insurance medical exam or are not eligible for a traditional plan. 

How it works: Simplified issue life insurance is easier to qualify for than traditional policies. It lets you forgo the life insurance medical exam and eligibility is determined purely on the basis of your answers to a few simple health-related questions. 

Pros:

• Easier to apply for than traditional life insurance and approval is usually much faster
• Offers a way to buy life insurance coverage for people who are unable to buy it any other way

Cons:

• More expensive than fully medically written policies
• Death benefit is limited (the maximum coverage amount is anywhere between $500,000 and $100,000)

Guaranteed issue life insurance

Best for: Seniors or people with serious underlying health conditions. 

How it works: A form of whole life insurance that doesn’t require you to complete a medical exam or answer health questions. Approval is guaranteed as long as you are within a certain age group. These policies have a two-year waiting period. If you pass away while the policy is in its waiting period, the insurer will not issue the death benefit but instead will refund the premiums paid with interest. 

Pros: 

• No medical underwriting required, allowing people who don’t qualify for traditional plans to obtain life insurance coverage
• Easier to apply for than traditional policies

Cons

• Costs significantly more than standard life insurance 
• Coverage amount is severely limited, $50,000 or even less

Factors That Affect Life Insurance Prices for Construction Workers

Apart from the specific details of your construction job, a variety of factors affect how much you will pay for life insurance, including age, gender, health, family medical history, and hobbies. Generally speaking, anything that increases your risk of death, such as an older age, pre-existing health conditions, a family history of a serious illness, or a dangerous hobby like) will lead to higher premiums. 

Conclusion 

There are many options for affordable life insurance for construction workers. The best life insurance company for you will depend on your unique needs. Some of them will likely rate work-related risks more favorably than others. The more insurers you can quotes from, the better your chances of securing desired coverage at a great price. 

Depending on the specifics details of your job, you may have to pay more, but not always. One benefit of working with Dundas Life is that we have contracts with multiple Canadian life insurance companies. Book a free call with one of our advisors today.

Frequently Asked Questions (FAQ)s

If I change jobs from construction to a less risky occupation, will my premiums decrease?

If your new job is significantly less risky than the previous one, you may be eligible for a lower rate. Insurance companies handle re-rating requests on a case-to-case basis, but you will likely have to wait for some time after switching to a low-risk job to be eligible for rate reconsideration. 

Do I need to get a medical examination to apply for life insurance as a construction worker?

Most insurers require a medical examination as part of their screening process. That said, some provides offer non medical life insurance, but these policies tend to be costlier.  

If I’m injured on the job and am unable to work for an extended period, can I pause my life insurance policy or premiums?

This depends on whether your policy includes the waiver of premium rider or not. The waiver of premium riders keeps your life insurance coverage active if you are unable to make premium payments because of disability. Keep in mind that this rider doesn’t come into effect immediately following a disability.

Instead, you must wait a certain length of time — usually six months — before you can stop paying premiums. During the waiting period, you must continue paying the premiums to keep the policy in force. With that said, many insurance companies reimburse the premiums paid during this period in the event of a successful claim. 

If there is no waiver of premium rider, your policy will lapse if you stop paying premiums, regardless of your personal circumstances. 

Is it more beneficial to get life insurance through my construction union or independently?

Life insurance obtained through a construction union will likely be cheaper than a comparable private policy. All the same, relying solely on it may not be in your interests because these policies are not always portable and tend to have lower death benefits.

In contrast, private life insurance plans remain in force even if you change jobs or retire and allows you to buy as much coverage as you reasonably need.  

Is workers’ compensation the same as life insurance?

No, these are two different products. Whole life insurance pays benefits regardless of the cause of death, with only a few exceptions, workers’ compensation provides cash benefit only if you are hurt on a job.