Your occupation plays a major role in disability insurance. From being allowed to apply; to the cost; to making a claim; what you do for a living is critical to every person’s disability insurance policy. In this article, we’ll review what’s important when it comes to the various definitions of disability. Whether you know that you want own occupation disability insurance or you’re just getting started; we can help.
Definitions of Disability
To understand own occupation disability insurance, you first need to know what definition of disability is.
The definition of disability in your disability insurance policy determines whether or not a claim is payable. In other words, it is language in your policy that dictates when you are considered disabled.
There are two main definitions of disability. They’re normally referred to as “any occupation” and “own occupation”.
We’ll look at both types and then dive into the “own occupation” definition of disability a little deeper.
Any Occupation Disability Insurance
You won’t find a lot of individual disability insurance policies that are only “any occupation”. If there is an “any occ” provision in your policy, it likely kicks in after a period of “own occ” coverage. An Any Occupation disability benefit is payable if you are unable to meet the substantial duties of any occupation that fits you by training, education, or experience. There might also be a stipulation that your new job can replace at least a certain percentage of your income.
The most well-known disability benefit that is considered an “any occupation” definition of disability is social security disability. This is the primary reason why it is very difficult to qualify for SSDI. It requires you to be unable to do ANY job versus your OWN job.
Own Occupation Disability Insurance
Most consumers visiting this website are looking to purchase own occupation disability insurance. By definition, that means a disability insurance policy that will pay claims if they are unable to do their actual job or profession.
Whether you’re unable to do your job due to sickness, illness, injury, or accident; an own occupation disability policy will pay claims once the elimination period is satisfied.
From there on out, things get a little murkier. There are many different types of own occupation disability insurance, each with their own definition of disability. Obviously, the easier it is to make a claim (due to a broad definition), the more expensive the policy.
As with all disability insurance policies, you have to weigh the benefits and coverage with the cost. Below we’ll review the various definitions of own occupation disability, from the least coverage to the most.
Modified Own Occupation
Found on many policies that focus on blue-collar professions, a modified own occupation definition of disability typically has two parts: the first part is considered “own occupation” and the second is “any occupation”
Put simply, these policies are normally considered “own occ” for the first part of the claim- typically two years. If the claim continues, the policy then switches to an “any occ” definition of disability.
If the benefit length is 2 years or less; this attribute may not matter.
In cases where the benefit length is longer than the own occupation period, some policies allow the insured to purchase a rider that extends the own occupation period. Of course, these riders cost money and their costs are not always feasible. That is why it is crucial to shop around for your disability insurance, rather than just consider one company.
Own Occupation-Not Otherwise Engaged
Aside from modified versions, this type of own occupation disability insurance affords the least amount of protection.
Like all own occupation definitions, a “not otherwise engaged” policy will allow claims if the insured cannot do their actual job. However, this type of policy will not allow you to do any other job either (assuming that you still want to receive your disability benefits).
In other words, in order to receive benefits, you have to be unable to do your job. You’re also not allowed to do any other job either.
Transitional Own Occupation
A policy with this definition will allow the insured to receive benefits while working in another profession. This is unlike a “not otherwise engaged” policy which doesn’t allow any additional work if you wish to continue receiving benefits.
There is one caveat to a transitional own occupation policy. That is, you must be making less than what you were previously earning. The transitional policy simply helps you to “make up” a portion of the lost wages.
This policy can be very attractive to people who want to return to work but would like to ensure that they won’t be earning less than their pre-disability earnings if they did so.
“Pure” or “True” Own Occupation
A “pure” or “true” own occupation disability insurance policy will pay disability benefits regardless of what the insured does for a living going forward. This is as long as they remain disabled from their original “own” occupation.
For example, let’s say that a surgeon develops a tremor and can no longer perform surgery. Even if that surgeon goes on to start a successful medical supply company and eventually earns more than when he was a surgeon, a true own occupation definition of disability insurance policy will continue to pay him benefits.
As you can imagine, this definition of disability is not only the most desirable, but it is normally the most expensive.
Summary
Whatever the definition of disability is on your policy; it is imperative that you own a disability insurance policy that fits your needs.
We provide expert, objective advice in helping consumers shop for and purchase disability insurance online.
If you’re looking for an Own Occupation disability insurance policy, contact us or simply complete the form on the left and we’ll get in touch.