Are All Own-Occupation Disability Insurance Policies The Same?

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Are All Own-Occupation Disability Insurance Policies The Same?
Read The Definition of Total Disability...
by Anthony Delvecchio
E-Mail Anthony Delvecchio

Are All Own-Occupation Disability Insurance Policies The Same? I have been an insurance agent specializing in individual disability insurance since July 2006. Over the years I have spoken to thousands of prospects regarding disability insurance. Almost to the number, the first thing out of their mouth is “I want to protect my occupation”. Now, disability insurance is not designed to protect your “occupation”, it is designed to protect your income. However, policy language does offer income protection in your “own-occupation”. This means your ability to perform the material and substantial duties of your occupation at the time of a disability. For those of us not familiar with disability insurance, trust me I wasn’t before I began this career, the term “own-occupation” doesn’t mean much. Once you begin to explore the idea of purchasing an individual disability insurance policy this term is thrown around and everyone wants this language on their contract, but having this language on your policy does not guarantee it will perform the way you initially believed it to work. Lets look at the different versions of “own-occupation” and the definition of a total disability.

1. “Own-Occupation”- because of injury or illness you are unable to perform the material and substantial duties of your regular occupation and you are not gainfully employed in another occupation.

2. “Own-Occupation”- because of injury or illness you are unable to perform the material and substantial duties of your regular occupation. We will consider you totally disabled even if you are working in another occupation so long as the disability prevents you from working in your regular occupation.

Now from the above definitions both claim to have an “own-occupation” definition of total disability, and yes they both do but there are dramatic differences in how each could and would potential pay. The first definition does pay a claim if you could no longer work in your regular occupation, however benefits would be reduced or discontinued if you chose to work in another occupation.

The second definition does the same as the above BUT if you choose to work in another occupation it WOULD NOT reduce your disability benefits. Same term “own-occupation” being proposed to the client, two totally different definitions and restrictions. The second policy is known in the insurance industry as a TRUE “own-occupation” policy.

When I speak to potential clients they know the term “own-occupation” and they know that is the policy they want. As an agent I could say to the client that YES you have “own-occupation” protection on your policy in both definitions and I would not be lying. I am not telling the whole story either. Make sure you read the definition of total disability. Make sure you understand how the policy works at claim. If you are looking to purchase an “own-occupation” disability policy, and you want to have the ability to work in another occupation without restrictions ask your agent to show you TRUE “own-occupation” options only.

Published October 28, 2011 by Anthony Delvecchio

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