When people think of Disability insurance policies, people envision insurance coverage for a severe injury or illness that hinders the insured from working. What they do not consider is the way their capability for work will be defined by the policy. This definition hidden in the fine print could be the difference between getting benefits or being denied.
The core of this is a clause known as “the “Own Occupation” clause It could be the most crucial element to know before purchasing disability insurance.
What Is the “Own Occupation” Clause?
“Own Occupation” clause defines the definition of disability that is based on your capacity to carry out the duties required by your particular profession, not simply any job.
Also, if you are unable to anymore perform the duties of your current job because of injury or illness, you may be eligible for benefits even if you are technically able to work in a different job.
For instance:
- A surgeon who is injured in her hands and is unable longer perform surgery may still be qualified for benefits under the “Own Occupation” policy, even if she is able to teach medical students or work in administrative work.
- Under a stricter term (called “Any Occupation”) insurance companies can refuse benefits if the applicant is able to work in any position that is compatible with their education, training or previous experience.
Why the Definition of Disability Matters
All disability insurance plans are not necessarily the same. The terms of your policy will determine whether you’re eligible for benefits and the differences in “Own Occupation” and “Any Occupation” can be significant:
- Own Occupation: It protects your right to perform your specific field.
- Any Occupation: Requires that you not be able to perform any job that is reasonable due to your education.
The first one is more extensive and usually more expensive. The second is less extensive, however it costs less.
If you don’t have the correct definition, you could end up not eligible for benefits when you’re in need of them most.
Types of “Own Occupation” Coverage
It is not the case that all “Own Occupation” clauses are identical. These are the three most common variants you may come across:
1. True Own Occupation
The gold-standard. You are entitled to benefits if you are unable to perform your job in the current position, even if you have a source of income from a different work.
For example, a dentist who is losing fine motor abilities cannot longer practice dentistry, but can begin consulting as a profession, but is still qualified for full disability benefits.
2. Modified Own Occupation
You are eligible for benefits if you cannot perform the job you currently have and you’re not in another position. If you accept the job of a different one, benefits might cease.
Example: A dentist in the same situation could be eligible for benefits when they decide not to perform any other job.
3. Own Occupation to Any Occupation
The coverage begins at “Own Occupation” for a time period (e.g. two years) and then shifts back to “Any Occupation” after that.
Example: You could qualify for benefits at first, but you will lose it after the definition has changed.
Why the “Own Occupation” Clause Is Especially Important for Certain Professions
Certain careers require highly-specialized capabilities that cannot be easily changed or transferred. For these types of jobs “Own Occupation” coverage is crucial:
- Medical Professionals: Surgeons, dentists, anesthesiologists where physical ability is directly tied to job performance.
- Accountants and Attorneys: Where cognitive sharpness precision, detail accuracy, as well as licensing requirements are important.
- Specific Trades: Pilots, electricians and other tradesmen with skilled licensing.
- Professions with high incomes: those who’ve put in many years of education and training.
In the absence of “Own Occupation” protection, the individuals could lose their main source of income, and possibly be forced to the lower-paying job.
Real-World Example:
Take a look at Dr. James, an orthopedic surgeon. After years of training and experience, a motor vehicle accident causes him to suffer injuries to his nerves on his right hand.
- With True Occupation coverage: Dr. James can no longer perform surgery. However, if he decides to instruct at a medical college or become consultant for hospitals and receive disability benefits, his disability coverage continues.
- With Coverage for Any Occupation: The insurer may decide it is possible that Dr. James can still earn an income as a medical instructor and thus decline benefits.
This could become millions, or hundreds of thousands, of dollars in lifetime earnings.
Common Mistakes People Make About the “Own Occupation” Clause
- Assuming Coverage by Employer Is enough
Employer-sponsored disability policies are set in “Any Occupation” or limit “Own Occupation” to a limited period of time. Always read your fine print. - Difficulty to understand the transition clause
Certain policies begin at “Own Occupation” and later switch into “Any Occupation,” which may unexpectedly reduce benefits. - Failure to Review As Changes in your career
When your work position changes, especially into a better-paying or specific field, your disability definition might not meet your needs. - Selecting based solely On cost
Although “Own Occupation” policies can be more costly, the added protection typically makes up for the extra cost.
How to Make Sure You Have the Right Protection
Here are some steps to make sure your disability insurance will protect your income and job:
- Review Your current Policy: Know precisely the definition of your occupation and how long the definition will be in effect.
- Use an independent Broker: A broker like Keen Coverage can compare multiple carriers and clarify policy language in simple language.
- Consider Supplemental Coverage: If your employer policy isn’t sufficient the individual insurance policy may help fill in the gaps.
- Ask about Riders: Certain policies allow you to include “True Own Occupation” coverage with an additional cost.
We understand that a disability insurance policy is more than just a contract. It’s your financial security net. Since we are an independent insurance broker, we have access to a vast selection of policy and insurance options. Our team of experts takes the time to:
- Explain every clause in clear, understandable language
- Check out “Own Occupation” and “Any Occupation” choices
- Create a customized insurance plan to meet your occupation and income.
- We can help you protect your long-term interests at a reasonable cost
Our mission is very simple: to ensure that you’re never unemployed in your chosen field and without the earnings you planned to earn.
Final Thoughts
The “Own Occupation” clause may be hidden away in your disability insurance policy however, it’s among the most important aspects you shouldn’t ignore. In the absence of it, you may be facing the possibility of being unable to perform the work you’ve been trained for, and also not eligible to receive benefits.
When you’re a professional whose earnings and skills are correlated to certain abilities, “Own Occupation” coverage could be the difference between stability in your finances and stress.
When you purchase or renew your Disability insurance policy, you should take a careful examination of how disability is defined. If you’re not sure, contact our experts. We’ll assist you in obtaining the coverage that is right for your job, your earnings and your goals in life.
Do you want to secure your career by securing disability insurance?
Contact Keen Coverage today to receive a customized policy review. Find out the ways “Own Occupation” protection can ensure your peace of mind in the near future.