Change Of Occupation Provision

What Does Change Of Occupation Provision Mean?

A change of occupation provision is a clause in an individual health insurance policy that allows the insurer to adjust the policy’s benefits and premium rates if the insured changes their job or career.

This provision benefits insured individuals working in hazardous occupations by providing a way to manage disability income claims. It also ensures that the insurer can charge an appropriate rate based on the risk associated with the insured’s occupation.

However, not all policies include this provision. If it is not included, no changes can be made to the policy, which can be disadvantageous to the insured. In such cases, the insured may continue paying a higher rate even if they are no longer working in a higher-risk occupation.

Insuranceopedia Explains Change Of Occupation Provision

Most health insurance policies are underwritten by the insurance company based on several factors. One key factor considered in underwriting is your occupation. These days, most people spend a significant portion of their time at work. Aside from sleep, work is likely the activity we engage in most on a daily basis.

This means that your occupation has a significant impact on your health and the level of risk from the insurer’s perspective. Certain jobs—especially those involving manual labor or working with potentially hazardous machinery—pose a higher risk of injury and disability compared to more sedentary office jobs. As a result, individuals in these occupations typically face higher health insurance premiums and more restrictive terms.

If an insured person changes their job to one that is considered less hazardous by the insurance company, the insurer will reduce the premium rate and refund any excess unearned premiums from the date of the occupation change or from the policy anniversary date. To enact this change, the insurer requires proof or documentation of the occupation change.

Conversely, if the insured switches to a more hazardous job and sustains an injury, the insurance company will only cover the individual based on the premium rate that was originally paid. After the claim is processed, the premium will increase once the policy terms are updated.

This occupation change provision not only affects premiums but also allows for adjustments to the policy’s terms and coverage. If you transition to a less hazardous occupation, the insurer may expand your coverage. However, if you move to a more hazardous occupation, your coverage could be reduced.