Thursday, October 7, 2010
How is Disability defined in an insurance policy?
If you have ever gone shopping for an insurance policy to provide income in the event you become disabled through illness or injury, did you understand how the policy defined your inability to work? Basically, there are three definitions of disability – “own occupation,” “regular occupation” and “any occupation.”
If we look first at the “any occupation” definition, it says you will receive benefits if you are unable to perform ANY occupation for which you are, or could become, qualified through training, education or experience. This gives a lot of clout to the insurance company because they can tell you they will provide training for you to enter an occupation other than your current one, and they could cut you off benefits if you decline their offer.
The next level is “regular occupation” and in this scenario, you are considered to be disabled if you are not able to fulfill the major duties of your regular occupation (the job you were doing the day you became disabled). You must also be under the care of a physician to the extent required by your condition, and you cannot be engaged in another gainful occupation. Most group insurance policies include this definition for the first two years. And then the definition is switched to “any occupation” (see above).
The third definition (“own occupation”) is available only to skilled professionals and would allow them to collect benefits while engaging in another occupation. An example might serve to illustrate this. If an eye surgeon develops a tremor in his hand through some illness, he will likely not be performing to many operations – at least not on MY eyes! He may, however, be able to continue to practice as a general practitioner – and collect his insurance benefit at the same time.
We all want the best coverage available, and we want to be as much in control of the claim process as we can. Making sure the definition of disability suits our needs is a good step in the right direction. It’s important to talk to your financial advisor and make sure your income will continue if you are not able to go to work.