In earlier posts we’ve discussed how agents don’t have the authority to change, delete, or add provisions to a disability insurance policy. We’ve also discussed how most disability insurance policy applications now contain language stating that you cannot rely upon representations made by agents regarding the scope of coverage, or eligibility for coverage. Thus, while agents can provide helpful advice and help to point you in the direction of a disability insurance policy that may fit your needs, it is ultimately up to you, the purchaser, to review your policy, become familiar with the provisions of the policy, and confirm that you are in fact purchasing the coverage that you expected to receive.
If you don’t take the time to do this, and blindly pay premiums without reviewing your disability insurance policy first, you could end up paying for coverage that provides less protection than you thought you were getting when you applied for the policy. For example, most physicians and dentists know that their disability insurance policies should be “own occupation”, meaning a policyholder is considered totally disabled (and eligible to collect benefits) when he or she can no longer work in his or her profession, versus being unable to work at all, in any profession. In some policies, own occupation is further defined as being unable to practice in a particular medical or dental specialty (i.e. anesthesiologist, periodontist, etc.).
Quite often physicians and dentists decide to buy another policy, either because they let a previous one lapse, or because they want to purchase additional coverage as their income increases and they can afford higher premiums, and they ask their agent for a new policy with the “same coverage”. This can be incredibly difficult or impossible to achieve, because over time disability insurance policies have evolved to become more restrictive, and each company has variations on what they deem an “own occupation” policy. Consequently, while your agent may present you with a policy that contains the phrase “own occupation”, it may not be a true own occupation policy at all.
For example, some policies are actually conversion policies, which mean they start out as “own occupation” policies, but after a certain time frame (e.g 2 years, or 5 years), they change to an “any occupation” policy, which means that, in order to continue receiving disability benefits, you would have to show that you can’t work at all. This can be very difficult to prove, particularly if you worked in another capacity for all or some of the prior “own occupation” period.
Even if your agent does locate an own occupation plan with similar premiums and benefit amounts to an older policy, there may also be provisions that cancel each other out in the new and old policies. One scenario we’ve seen is a disability insurance policy containing the provision that a claimant must not be working (a “no work” provision) in their own occupation or another profession in order to collect benefits, while the second policy states that a claimant must not be working in their own occupation but must be working in another field in order to collect benefits (a “work provision”). Under this scenario, in essence, one of the policies you’ve been paying years of premiums for is worthless, as both requirements cannot be met at once.
These examples highlight why it is important that you do more than just check an “own-occupation” box on your application and/or blindly rely on your agent’s assurance that a new policy is compatible and/or the same as an existing one. If you end up with a policy you essentially cannot use, your recourse is limited, as insurance companies have gone to significant lengths to shield themselves from any liability based on an agent’s representations of a policy. It is therefore far better to take the time to review your policy at the outset, before you pay years of premiums, to ensure that it provides the disability coverage that you applied for and need.