Chartered Life Underwriter Practice Exam 2026 - Free CLU Practice Questions and Study Guide

When considering the factors that influence the cost of life insurance, one of the most significant is the assessment of risk associated with an individual's lifestyle and occupation. In this context, a high-risk occupation would lead to increased costs for life insurance coverage.

Individuals engaged in high-risk jobs—such as construction workers, firefighters, or those in extreme sports—are statistically more likely to experience injury or death compared to those in lower-risk occupations. Insurance companies evaluate these risks carefully and charge higher premiums to mitigate potential losses that may arise from providing coverage to individuals involved in such dangerous work. As a result, individuals in high-risk occupations present a greater financial risk to insurance providers, leading to higher costs of insurance.

On the other hand, factors like age, health status, and smoking habits generally correlate with lower risk. Younger individuals tend to have lower mortality rates, and good health or non-smoker status further decreases the likelihood of claims, resulting in lower premiums. Therefore, while all the other factors listed are favorable and likely lead to lower insurance costs, a high-risk occupation stands out as a primary contributor to increased costs in life insurance.