Do I Have the Own Occupation Coverage I Think I Do? Part II
Our last post compared two policies with different “own occupation” riders. In this post, we are going to look at the NML “medical own occupation” rider in more detail, to further highlight how complicated “total disability” determinations can be under some disability policies.
Here’s the beginning of the rider again:
Total Disability or Totally Disabled. The words “Total Disability” or “Totally Disabled” mean the Insured is unable to perform the substantial and material duties of the Regular Occupation.
If the Insured can perform one or more of the substantial and material duties of the Regular Occupation, the Insured will be considered Totally Disabled if:
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- The Insured is not Gainfully Employed in an occupation;
- More than 50% of the Insured’s time in the Regular Occupation at the time Disability began was devoted to providing direct patient care and services; and
- The Insured is unable to perform the substantial and material duties which accounted for more than 50% of the Insured’s charges for direct patient care and services as evidenced by the Billing Codes for the 12 months before the Disability began.
If the Insured can perform one or more of the substantial and material duties of the Regular Occupation and is not considered Totally Disabled, the Insured may qualify as Partially Disabled.
This may already seem overly complicated, but the policy only gets more complicated when it comes to the next part of the rider that outlines how to calculate the benefits payable for total disability based on the above-enumerated parameters. Let’s take a look:
The Benefit payable for Total Disability is:
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- the Disability Income Full Benefit, if the Insured is Totally Disabled and not Gainfully Employed; or
- the Calculated Benefit, if the Insured is Totally Disabled and working in an occupation other than the Regular Occupation.
Calculated Benefit: If the Insured has no other Northwestern Mutual Individual Disability Income policies, the Calculated Benefit is the lesser of:
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- the Disability Income Full Benefit; or
- the Insured’s Loss of Earned Income.
If the Insured is covered under any other Northwestern Mutual Individual Disability Income policies, the Calculated Benefit is the lesser of:
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- the Disability Income Full Benefit; or
- the following equation: Eligible Benefit X Disability Income Full Benefit of the Policy/Transitional Coverage
Eligible Benefit means the Loss of Earned Income minus Non-Transitional Benefits.
Transitional Coverage means the sum of the Disability Income Full Benefits of all Northwestern Mutual Individual Disability Income policies, which cover the Insured, that include the Transitional Own Occupation Option or the Medical Own Occupation Option.
Non-Transitional Benefits means the sum of all the monthly benefits payable to the Owner under all Northwestern Mutual Individual Disability Income policies, which cover the Insured, that do not include the Transitional Own Occupation Option or the Medical Own Occupation Option.
If the Calculated Benefit is less than the Proportionate Benefit, then the Calculated Benefit is equal to the Proportionate Benefit, as set forth in the Partial Disability Benefit.
If the Loss of Earned Income is less than or equal to zero, then no benefit is payable under this Option. In no event will the amount payable be more than 100% of the Disability Income Full Benefit.
As you can see here, there are a myriad of paths/scenarios that go into calculating a benefit, including multiple paths to the physician’s claim being designated a Partial Disability claim. In this NML example, in order to determine total disability and whether a full benefit is received, a wide array of questions must be answered, including:
- Am I unable to do all my substantial and material duties, or just some of them?
- Am I gainfully employed?
- Was my time working spent doing 50% or more providing direct patient care and am I unable to do those associated duties?
- Am I actually just Partially Disabled if I can do one or more of my substantial duties?
- Am I working in another occupation?
- Do I have any other Northwestern Mutual policies and how much coverage do they provide?
- Do my other policies have Transitional Own Occupation or Medical Own Occupation riders?
- Have I had a loss of income?
In traditional, older true own occupation claims, the matter of determining total disability was relatively simple—i.e. can I work at all in my occupation? If the answer was no, the policyholder was entitled to their full benefit under the policy.
Here, even if you are physician and unable to practice, you may end up receiving less than a full benefit depending on the amount of patient care you were providing at the time of your disability, whether you are working in another occupation, and whether you have other coverage.
This is only one policy, but it is an example of why it is so important to understand how your policy works before you file a claim. If you are a physician and think you may need to file a disability insurance claim and have questions, please feel free to reach out to one of our attorneys directly.
