Do You Have the “Own Occupation” Coverage
You Think You Have?

Most physicians and dentists know that they should purchase an “own occupation” policy that provides disability benefits if they are no longer able to practice in their profession. True own occupation policies pay benefits if the insured cannot perform at least one of the material and substantial duties of his or her occupation. Some policies are also specialty-specific and further define “occupation” as the dentist or physician’s specialty.

While true own occupation and specialty-specific policies were commonplace in older disability insurance policies, newer policies are substantially different across the board. Over time, insurance companies have come up with several variations of the “own occupation” provision and these new provisions typically contain additional requirements and limitations that restrict coverage and/or make it much more difficult for professionals to prove they are totally disabled and collect benefits.

This is something that not always apparent from the marketing and application materials provided when you are purchasing the policy. For example, a physician quickly reviewing a policy application may check the box for the “medical occupation definition of total disability” rider because it sounds like what he or she would want if he or she could no longer practice. It’s likely that the physician would just assume that this option is the equivalent of the true own occupation policy described above, and move on to the next part of the form without a second thought. However, if the physician never reviews the subsequently issued policy, he or she may be in for a surprise if the need to file a claim arises.

Here’s an example of what you could get if you ask for a “medical occupation definition of total disability option” (taken from an actual policy):

(Click here for a larger view.)

In addition to this being a particularly confusing, complex total disability definition, this rider would also cost you higher premiums, without providing the disability coverage that you likely wanted.

It is therefore very important to review your policy when it is issued, to ensure you have a complete and accurate understanding of the coverage that you are paying thousands (upon thousands) of dollars in premiums for, so that you have the disability coverage you need, if/when you need it.

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Watch Out for “Work” Provisions

In a previous post, we discussed the importance of how your disability insurance policy defines the key term “total disability,” and provides several examples of “total disability” definitions.  The definition of “total disability” in your policy can be good, bad, or somewhere in-between when it comes to collecting your disability benefits.

Disability insurance policies with “true own occupation” provisions are ideal.  Here’s an example of a “true own occupation” provision:

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Total disability means that, because of your injury or sickness, you are unable to perform one or more of the material and substantial duties of your Own Occupation.

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Under this type of provision, you are “totally disabled” if you can’t work in your occupation (for example, you can no longer perform dentistry).  This means that you can still work in a different field and receive your disability benefits under this type of disability insurance policy.

Insurance companies often try to make other disability insurance policies look like true own occupation policies, and include phrases like “own occupation” or “your occupation,” but then tack on additional qualifiers to create more restrictive policies.

One common example of a restriction you should watch out for is a “no work” provision.  Although these provisions can contain the phrase “your occupation” they only pay total disability benefits if you are not working in any occupation.  Here’s an example from an actual policy:

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Total disability means solely due to injury or sickness,

  1. You are unable to perform the substantial and material duties of your occupation; and
  2. You are not working.

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As you can see, under this type of provision, you cannot work in another field and still receive disability benefits.  This can be problematic if you do not have sufficient disability coverage to meet all of your monthly expenses, as you’re not able to work to supplement your income.

A “no work” provision is something that is relatively easy to recognize and catch, if you read your policy carefully.  Recently, we have come across a definition of “total disability” that is not so easy to spot, but can dramatically impact you ability to collect benefits.  Here’s an example, taken from a 2015 MassMutual policy:

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OWN OCCUPATION RIDER

Modification to the Definitions Section of the Policy
Solely for the Monthly Benefits available under this Rider, the definition of TOTAL DISABILITY is:

TOTAL DISABILITY – The occurrence of a condition caused by a Sickness or Injury in which the Insured:

  • cannot perform the main duties of his/her Occupation;
  • is working in another occupation;
  • must be under a Doctor’s Care and
  • the Disability must begin while this Rider is In Force.

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At first glance, this looks like a standard “own-occupation” provision—in fact, it is entitled “Own Occupation Rider.”  But if you take the time to read it more closely, you’ll notice that the second bullet point requires you to be working in another occupation in order to receive “total disability” benefits.

Obviously, this is not a disability insurance policy you want.  If you have a severely disabling condition, it may prevent you from working in any occupation, placing you in the unfortunate position of being unable to collect your disability benefits, even though you are clearly disabled and unable to work in any capacity.  Additionally, many professionals have limited training or work history outside their profession, so it can be difficult for them to find alternative employment or transition into another field—particularly later in life.

These “work” provisions appear to be a relatively new phenomenon, and are becoming increasingly more common in the newer disability insurance policies being issued by insurance companies.  It is crucial that you watch out for these “work” provisions and make sure to read both the policies definition of “own-occupation” and “total disability.”  While many plans contain the phrase “own-occupation”, including this example, they often aren’t true own-occupation policies and you shouldn’t rely on an insurance agent to disclose this information.  Oftentimes, your agent may not even realize all of the ramifications of the language and definitions in the disability insurance policy that they are selling to you.

Lastly, you’ll also note that this particular provision was not included in the standard “definitions” section of the disability insurance policy, but was instead attached to the policy as a “rider,” making it even harder to spot.  It’s important to remember that many definitions and provisions that limit disability coverage are contained in riders, which typically appear at the end of your policy.  Remember, you should read any disability insurance policy from start to finish before purchasing.

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