InsuranceThought — Blogs About Insurance

Buyers of disability insurance must be aware that there is no regulation regarding the various terms used in individual long-term disability insurance. The definition of “own occupation” stated within one provider’s contract is not necessarily the same as another’s. As is typical for most of us, the consumer is not likely to read an entire contract to discern the differences in definitions. You may believe that an “own occupation” policy is the same as “modified own occupation one.”

You need to know that some insurance agencies will market disability insurance policies with the words “own occupation” on their marketing materials, but the policy is actually anything but the “own occupation” insurance as defined just ten years ago. What the companies are actually marketing are income replacement contracts.

As you might think, based on the name of the insurance, “own occupation” should mean that if you are injured to the point of being unable to perform the duties of your chosen occupation, the insurance company will pay you regardless of whether or not you are capable of performing another. However, the new (and, in my opinion, quite deceptive) contracts usually state “so long as you are not engaged in any other occupation” meaning that if you make a claim and then begin working in another field, the insurance company will reduce your disability benefits accordingly. They may possibly end the claim and not pay you anything.

You should never take the word “own occupation” for granted; to make sure you are receiving the best definition of total disability look for something like this:

“Because of sickness or injury you are unable to perform the material and substantial duties of your regular occupation. We will consider you to be totally disabled even if you are at work in some other capacity, so long as the disability prevents you from performing your original occupation”

If the words “any other occupation” or “gainful occupation” are in the contract, you may want to look elsewhere to see if you are eligible for a true “own occupation” policy. Certain occupations are simply not eligible for this type of coverage.

There is a tremendous amount of information to understand in a disability policy; they are often easily misinterpreted by anyone unfamiliar with how the insurance coverage works. You should always contact a professional and ask all the questions you can think of to fully understand what your contract covers – AND, what it doesn’t.