Disability Insurance 101
What does “Own Occupation” mean and why does it matter?
If you only know one thing about disability insurance, it should be the definition of disability. Your policy’s definition of disability determines whether you are considered disabled enough to receive benefits. You may have heard the term “Own Occupation” disability insurance. So what does “Own Occupation” really mean, and why is it so important?
Own Occupation is arguably the best definition of disability. With an Own Occupation policy, you can receive benefits if you are unable to work in the job you had before you became disabled. So if you’re able to work in another capacity, you may still be eligible for benefits. This type of policy protects you even if you take a similar job in the same field. For example, a litigator who can no longer litigate, but can still practice law may still qualify for disability benefits.
There are several types of Own Occupation disability insurance:
- True Own Occupation. The most comprehensive coverage available, benefits are paid in full if you are totally disabled, even if you become employed in a new occupation. Your benefits are not offset by any income you may receive from your new occupation. For example, a surgeon who can no longer perform surgery may work in a related medical field and still collect full disability benefits.
- Modified Own Occupation. Defines disability as in the inability to work in any profession. With this type of policy, you’ll receive benefits only if you are not working in a job you’re qualified to perform. In this example, the surgeon who can no longer perform surgery, but chooses to work in a non-surgical field would probably not qualify for benefits.
- Transitional Own Occupation. This type of policy is similar to True Own Occupation, but limits your benefits to the difference between your total monthly benefit and that which you can earn in your new employment.
Own Occupation is a critically important feature in disability insurance, especially for those working in highly specialized fields like medicine or dentistry. Own Occupation is the most expensive type of disability insurance, but it’s also the one that best protects your income.
Any Occupation disability insurance provides benefits if you are unable to perform any work for which you have been trained, even if it’s not your specialty. With this type of policy, you may not be eligible for benefits if you can work in another job following a disability, regardless of whether or not you choose to do so. Any Occupation policies are designed – and priced – for serious injuries or illnesses that prevent you from working at all. Less expensive than Own Occupation policies, you’ll need to prove you’re unable to work in a field suited by your education, experience, and training to receive Any Occupation benefits.
Regardless of your profession or income level, it’s important to consult with an Advisor regarding the best type of disability insurance for your profession and your individual needs.