How occupation class affects disability insurance

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occupation class

The type of duties a person performs and the nature of the industry they are in have a tremendous impact on the risk of disability. For example, an arm or leg injury may only disable an office worker for a week or two, but the same condition could cause a construction worker to be unable to work for a considerable period. Therefore, an insured’s occupation class is essential in determining the premium rate for the policy and its available riders.

Not only do injuries affect the length of disabilities for different occupations, certain occupations are also more prone to disabilities. Using the previous example, the construction worker who engages in more physically demanding tasks will be more likely to become disabled than the office worker who performs light duties.

Let’s look at how insurance companies classify occupation classes and the difference in premium between the classes.

Classifying occupation classes

Insurance companies in Canada typically follow a single system for classifying occupation classes. At one end of the spectrum are the lowest risk and most stable occupations, which have the lowest premium rates. At the other end are the occupations that are usually associated with heavy physical exertion, hazardous working environments and have the highest risk of injuries or illnesses.

4A: Occupations listed under the 4A class have the lowest risk and have a high degree of stability. Most require a significant amount of post-secondary education and because of that, are in fields where disabled individuals would be more motivated to return to work. Premiums are lowest for the 4A class.

Examples: Fee for service professionals, such as doctors, dentist specialists, lawyers, pharmacists, university professors and accountants with a designation. Business owners and executives who perform office duty only, and who have an established record of stability and increasing income in excess of $65,000 annually.

3A: This classification includes occupations requiring no physical exertion or effort other than expected in clerical or similar non-hazardous work. For the most part, this would consist of paper work at a desk or operating customary office business machines.

Examples: Office workers with administrative duties only, bank tellers, general dentists, paralegals, accountants without a designation. Business owners who do not fit the description of 4A.

2A: The degree of risk or physical activity again increases in the 2A risk class. The 2A class normally has more specific physical duties than a 4A or 3A risk. It includes some business owners and people working in a supervisory capacity.

Examples: Salespeople and clerks with sales duties only, computer technicians, registered nurses, registered massage therapists, reporters, owners of certain businesses such as restaurants and hotels.

A: This is the most favourable classification for applicants whose duties include any manual labour. The A occupation class contains skilled workers who have a specific trade for which they are trained. Business owners in this category are usually working sole proprietors, such as plumbers. Unskilled workers whose duties are light and where working conditions are favourable may also be classified as class A. An extremely hazardous working environment must be absent to qualify for class A.

Examples: Driving school instructors, bus drivers, autobody owners, bakers, carpenters, plumbers, waiters.

B: Occupation class B is reserved for jobs requiring heavy physical exertion. These occupations involve a considerable amount of risk and a high rate of absenteeism. Working conditions are more hazardous and can involve extreme heat, humidity or temperature changes, which result in frequent illness. Typically, because of the extreme physical exertion, disabilities are prolonged compared to the lower risk occupation classes. The result is that class B has the highest premiums for disability insurance.

Examples: Autobody repairmen, dental assistant, ambulance drivers, policemen, bartenders.

Uninsurable occupations: Some occupations are uninsurable because of unusual physical hazards, such as workers having to handle explosives, or because of a high degree of job instability, such as actors and writers.

Examples: Pilots, flight attendants, models, musicians.

Remember, it is the actual duties that and not the job title that are important in the determination of occupation class. Those who have split duties, such as business owners and managers, are more difficult to classify. It is important to establish all of the duties and the percentage of time spent at each to properly classify the occupation class.

Each insurance company has their own occupation class guide which lists all the common occupations. Anything not listed in the guide is considered an uninsurable occupation, although there are exceptions where each case is considered on an individual basis for proper classification.

Occupation class upgrades

Where an individual meets certain experience and income threshold, they are eligible for an occupation class upgrade. Upgrades reward applicants who have stability in their occupations. Insurance companies are also more inclined to take on the risk, since the income threshold serves as motivation for disabled individuals to return to work.

There is a maximum upgrade of two classes available. For example, class B can be upgraded to class 2A and not beyond. Some occupations are ineligible for an upgrade no matter the experience and income.

To give you an idea of how much a policy with each definition costs, see the tables below.

Monthly premium for a male non-smoker with annual earnings of $51,750, who is eligible for $3,000 of non-taxable monthly benefit. 120 day elimination period, benefit period to age 65, premium level and guaranteed until age 65. Quote from Canada Life's Lifestyle Protection Plan. Rates are current as of May, 2015.
Age4A3A2AAB
25$34.19$48.01$66.34$76.12$106.03
30$37.91$53.03$73.2$83.57$117.75
35$46.20$65.70$87.11$105.25$136.57
40$57.54$83.95$106.52$131.49$172.64
45$70.50$103.47$134.20$164.35$225.05
50$91.02$138.30$169.48$212.17$285.29
55$114.24$172.70$215.98$276.40$357.03
Monthly premium for a female non-smoker with annual earnings of $51,750, who is eligible for $3,000 of non-taxable monthly benefit. 120 day elimination period, benefit period to age 65, premium level and guaranteed until age 65. Quote from Canada Life's Lifestyle Protection Plan. Rates are current as of May, 2015.
Age4A3A2AAB
25$57.06$78.47$97.10$111.35$150.91
30$66.75$86.49$105.17$122.83$165.70
35$79.57$103.66$127.80$147.37$192.73
40$90.29$121.59$144.73$169.19$221.89
45$102.77$138.51$156.28$190.73$255.26
50$120.24$160.74$175.80$225$302.27
55$138.79$183.79$224.19$282.02$372.23

Individuals belonging in occupation class 4A have the advantage of the lowest premiums. Price increases gradually as the risk increases until it reaches class B, which has the highest premiums.


The occupation class is one of the largest determinants of premium for disability insurance. The definitions of each class and the tables help you understand the cost of disability insurance for yourself. Although it is difficult to move up the scale, insurance companies offer an upgrade of occupation class to those they deem to be a lower risk.


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