Occupational Class

Occupational class is the category assigned to an individual based on the type of work they perform and the level of risk associated with their job. Insurers use occupational classes to help determine eligibility, premium rates, and benefit levels for life, disability, and accident insurance. The classification reflects how likely a person is to experience injury, illness, or death related to their occupation.

How It Works

Insurers sort applicants into occupational classes based on how likely a person is to experience injury, illness, or death related to their occupation. Jobs that involve physical labour, hazardous environments, or high travel demands are usually placed in higher-risk occupational classes and therefore have higher premiums, while office-based or administrative jobs are considered lower risk and receive more favourable rates. The class then helps determine eligibility, premium rates, and benefit levels for life, disability, and accident insurance. Disability and income insurance, for example, provides replacement income when a person is unable to work due to an illness or an accident, and is useful for employees without group disability coverage, self-employed workers, and small business owners. Under iA Financial Group's Superior Program, the income replacement benefit is available for all workers and covers income based on the person's job or occupational class.

Example:

An office administrator in Canada may be classified in a low-risk occupational class and pay a lower disability insurance premium. A construction worker, who faces a greater risk of on-the-job injury, would fall into a higher-risk class with a higher premium for the same amount of coverage.

What to Watch For:

Describe your job duties accurately on an insurance application, because misrepresenting or oversimplifying your role can lead to incorrect classification and potential claim issues. If your occupation changes after you purchase coverage, notify your insurer, because the classification may affect eligibility for future claims or renewals. It also helps to understand the tax treatment of personally owned coverage: for individually owned and paid disability insurance, the premium is considered a personal or living expense for income-tax purposes and is not deductible, but the disability claim benefits paid to the individual are not taxable.