Happy Easter! The following is a post by one of our sponsors, Chris Wimberly from TheDisabilityDoc. Every doctor or high income professional should have disability coverage. If you don’t, head over to TheDisabilityDoc and get a free quote.
Well, it depends. It depends on the type of work you do. Ultimately, the goal is to make sure your income is protected in the event you are too sick or hurt to work. With that goal in mind, it is not a “one-size fits all” answer.
If your plan is not designed correctly, you could either “over pay” (costing you lots of extra premium), or you could find yourself with a “less than adequate plan” (that ends up not protecting you at all). Neither scenario is beneficial to you.
Explained, the “Definition of Disability” is the contract language that an insurance carrier will use to determine when an individual is officially considered to be disabled and eligible for benefits. It is arguably the most important part of your plan. If your disability situation does not satisfy the contract language, you would not be considered disabled, and therefore… no benefits will be paid to you. This would be a major bummer to say the least.
With that in mind, read below to breakdown a few common definitions found in the market:
Any Occupation
This is just as it sounds – because of an illness or injury, you are unable to work in any feasible occupation. For a “desk job” with mundane tasks (like simple data entry for example), this definition could be argued as being sufficient because you have no “special duties” or “significant training” involved.
However, it should be noted that this is by far the hardest definition of disability to meet (meaning very few disability scenarios would actually result in benefits being paid out). Even in the most mundane administration position imaginable, it is possible the insurance carrier might deem you able to theoretically work in some sort of job out there, and therefore, no benefits. This definition is extremely common with many “group” disability plans.
Own Occupation
This definition does cover you in your occupation – on a general level. This means the insurance carrier could consider your occupation to be that of a “generally recognized physician”, but does not recognize you in your actual “specialty of medicine.” It is a very common definition with “group” disability plans offered through employers as well.
To help illustrate – if you are in pediatrics, psychology, or an internist, then this definition may be sufficient for you. But, if you are a “procedural based” professional (like ER or anesthesiology), it might not. For example, if you are procedural based, and in your disability situation the insurance carrier determines that you can still do the do duties of a “generally recognized physician”, then you will likely not be considered disabled under this definition (even though you cannot perform the duties of your actual specialty). This is not good.
Own Occupation (Specialty Specific)
This is exactly as it sounds. You are covered based on your specialty or area of expertise. This is an excellent definition of disability for procedural based professionals, but it does have potential downsides. If the majority (or even a small portion of your income) comes from a procedure that is new, advanced, or a possibly a brand new technology, and not all specialists in your field are generally using this new procedure or technology, you could have an issue and not receive adequate disability pay out.
Own Occupation (Actual Duties)
This is the most comprehensive definition when determining someone’s occupation. It is based on the actual duties performed just prior to filing a disability claim. Documentation such as: insurance billing records, financial statements, etc. are used to determine one’s actual duties. If it is found that you are unable to perform one or more of those duties, you would be considered disabled. This definition is very common with “individual” disability plans and rarely offered with “group” plans.
True Own Occupation
This definition is typically only offered through certain “individual” carriers. It allows you the option to generate income in a new occupation should you choose (without negatively impacting your disability benefits). In a sense, with this definition, you can “double dip”. For example, maybe you are a surgeon and injure your hand, so you can no longer perform surgery, but you choose to teach at a medical school. In this case, you could earn a full income as a professor, and also still receive full disability benefits, because you can no longer perform surgery.
Modified Own Occupation
This definition is similar to True Own Occupation; however, if you choose to earn an income in a new occupation, your benefits will be reduced by whatever income it is that you are earning in that new occupation. It does not allow you to “double dip” and earn income elsewhere while receiving full benefits. If you do choose to earn an income elsewhere, your benefits will be reduced proportionately. It is a very common definition with “association” style disability plans.
Enhanced Own Occupation
This is an extremely comprehensive definition of disability only available with one carrier in the individual market. The plan specifies that you can become disabled and be losing income, but still working within your own occupation, and receive full benefit payout as if you were totally disabled. It is designed specifically for physicians and would only be beneficial for those physicians whose income is at least 50% procedural based.
Medical Own Occupation
This is a very complex and convoluted definition only available with one carrier in the individual market. It closely resembles the “modified” definition of disability and is unique to the carrier that developed it. It is a definition that is difficult to interpret and leaves many opportunities for the insurance carrier to decide not to pay. Tricky, because the name itself implies it is built for medical professionals, when in fact it can actually be harmful for certain specialties of medicine.
As you can see, there are many definitions to consider. It is advised that you work with someone you trust, and who knows what they’re doing, to help you correctly protect your income!
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