Occupation classes explained

Every New Zealand insurer maintains an internal table that sorts thousands of job descriptions into a handful of risk bands. Ask for the band and you will be told a number from 1 to 5, or a letter code from AAA through to D, or occasionally a word like “professional” or “heavy manual”. Say “commonly” when you talk about those labels, because they are not standardised. One insurer’s class 3 is another’s class B, and the duties that sit inside each band are drawn differently again.

The band is a statement about two things: how likely you are to be off work, and how hard it will be to get you back. A lawyer who breaks a wrist can dictate for six weeks. A scaffolder who breaks a wrist cannot go near a site.

It matters that classification is done on duties, not job title. “Builder” tells an underwriter almost nothing. A builder who spends four days a week on the tools, cutting, lifting and working at height, is being assessed on a completely different risk profile from a builder who quotes jobs, manages subcontractors and is on site in boots and a hard hat but not swinging a hammer. Both call themselves builders. They are not in the same class, and the premium difference over a twenty-year policy is real money.

People assume occupation class is only a pricing lever. It is not. It changes the product you are allowed to buy.

That last row is the one people get wrong. A roofer told “your occupation is a problem” assumes all insurance is a problem. It is not — the difficulty concentrates in income protection and TPD.

Here is the shape of it — a map of the territory rather than any particular insurer’s table.

Advice written for Australia or the United Kingdom does not transfer cleanly, because we have ACC. ACC covers personal injury by accident for everyone in New Zealand — at work, at home, on the road, on the weekend — and pays weekly compensation at 80% of pre-injury earnings up to a statutory maximum, subject to its own rules. That is a large chunk of the risk a manual worker faces, already socialised.

What ACC does not cover is illness. Cancer, heart disease, stroke, multiple sclerosis, most mental illness, and back or joint problems that are degenerative rather than the result of a specific accident all sit outside the scheme. There are defined exceptions for work-related gradual process injury and for listed occupational diseases — noise-induced hearing loss, occupational asthma, some dust diseases — but those are assessed case by case and are narrower than most people assume.

So the honest framing for someone in a physical job is this: your accident risk is high and largely already covered. Your illness risk is the same as everyone else’s and is not covered at all. That gap is what private cover is for.

Your class is set at application. Life does not stay still, and the policy has rules about that.

• Most income protection and TPD wordings require you to notify the insurer if you change occupation. Read the exact clause — the obligation and its consequences vary.
• Moving to a riskier occupation is the one that matters. An office manager who becomes a self-employed roofer has changed the risk the insurer priced, and how a claim is assessed can depend on whether that was disclosed.
• Moving to a safer occupation can work in your favour. If you have come off the tools into estimating or management, ask for a re-rate — insurers do not do it automatically.
• Dropping below the minimum hours in your policy — part-time, seasonal, parental leave — often changes how “totally disabled” is assessed, and sometimes changes eligibility.

This is the part of an application where a careful adviser earns their commission several times over, and it takes about ten minutes.

1. 1Write down your duties as a list, with rough percentages of your week. “Quoting and site management 60%, on the tools 40%” is an underwriting statement. “Builder” is not.
2. 2Be specific about heights, machinery, chemicals and driving. Insurers have thresholds — working above a set height, operating particular machinery, hours behind the wheel — and being under a threshold is worth money.
3. 3State your qualifications and registrations. A licensed, registered or chartered person is often banded above an unlicensed one doing similar work.
4. 4State your hours and whether they are stable. Minimum-hours requirements sit in most income protection policies.
5. 5Have the adviser test the same duties across several insurers before anything is submitted. Classification differences are routine and only worth finding beforehand.

Every New Zealand insurer writes income protection and TPD for a rated occupation to its own wording, and the words are where the money is. Two policies that look identical on price can pay very differently when it matters. Closing that gap is the entire job of an adviser.

• Occupation tables differ enough between insurers that the same duties can land two bands apart. An adviser tests the description across the panel before anything is submitted.
• Which insurers will currently offer a five-year rather than two-year benefit period to a given heavy occupation changes over time, and is not published anywhere a consumer can see it.
• Own-occupation TPD is sometimes available to a class that would not normally get it, where the person is licensed, registered, or has a specialised skill set. It has to be asked for.
• Where income protection is unavailable or unaffordable, an adviser can build the equivalent from mortgage repayment cover, trauma cover and TPD instead of leaving you with nothing.
• Accident-only income protection is sometimes proposed to manual workers. With ACC already in place it is often the least useful version of the product, and an adviser should be able to say why they are recommending it.
• If your duties have changed since the policy was written, an adviser can put the case for a re-rate to a lighter class — which insurers rarely volunteer.

There are three ways to buy life cover in New Zealand, and they are not equivalent. You can buy direct from one insurer, which means you see one product range and one underwriting appetite. You can buy through your bank, which usually means a single insurer’s product sold under the bank’s brand, often with narrower definitions. Or you can go through an adviser, who quotes several insurers at once and is required to put your interests first.

The premium you pay is the same either way. Insurers build adviser commission into their pricing whether or not an adviser is involved, so going direct does not get you a discount — it just removes the person whose job is to argue your corner at application and at claim time.

• An adviser can see which insurer is currently taking your health history on standard terms, and which one will load or exclude it.
• An adviser can structure cover across two insurers if that produces a better outcome than putting everything with one.
• An adviser handles the underwriting back-and-forth, and is the person who chases the claim when a family is least able to.
• An adviser has to document why the recommendation suits you, which is a written record you can hold them to.

We are a referral service, not an insurer. We do not quote premiums and we do not sell policies. What we do is put you in front of one licensed New Zealand adviser who can compare the market properly.

1. 1

   You tell us what you are looking at

   The form takes about a minute. Nobody asks for your medical history on a web form — that conversation happens with the adviser, properly, and only once you have decided to proceed.

2. 2

   An adviser calls you

   A licensed New Zealand adviser talks through your situation: who depends on you, what you owe, what you already have in place, and what you are actually worried about.

3. 3

   They compare the market

   The adviser quotes across the major insurers, checks which of them will take your health history on the best terms, and puts the options side by side in writing.

4. 4

   You decide, in your own time

   There is no obligation and no cost to you. If the answer is that you already have enough cover, a good adviser will tell you that.