True Own-Occupation vs The “Other“ Own-Occupation
The first component to confirm in disability protection is the definition of disability, which determines what must occur before someone can collect policy benefits. While there are several definitions available, for professionals (physicians, attorneys, accountants, etc) and business owners, it is generally recommended to have an “Own Occupation” definition of disability, which pays benefits if you are unable to perform the duties of your current occupation.
However, there are several different versions of own-occupation and they are not created equal.
The True, or Specialty, Own-Occupation definition states that you’re considered disabled if, due to injury or illness, you’re unable to perform the material duties of your current occupation. In addition, there is no penalty for engaging in a different occupation or earning income from another source. This is the ideal definition because if you become disabled from your current occupation, you can then work in another occupation (consult, teach, write a book, etc) without jeopardizing policy benefits.
The “Other” Own-Occupation definition is the version typically found in many group and individual policies not requiring medical underwriting. Often called “modified” own-occupation, this version also pays benefits if you’re unable to perform the duties of your current occupation. However, you cannot earn income from another occupation without reducing or eliminating policy benefits.
The True Own-Occupation definition of disability is ideal because if disabled, you can work in another occupation without jeopardizing policy benefits.
Does It Matter?
Yes, because these definitions are very different in actuality. A significant percentage of disabilities are not catastrophic. Without the true own-occupation definition, you would be penalized for earning income from another source while on claim, which can be a significant length of time. A number of our clients on claim are still able to make valuable contributions for which they can be and are compensated.
What about the cost?
Combining the permanent discounts we can obtain with the accurate pricing of the top insurance carriers, the cost for the true own-occupation definition can be very close to the cost for the lesser definitions. It’s definitely worth exploring based on your specific occupation, age and health.
Click on the video to see Billy’s interview by Dr. Jeremy Pyle for an educational series shown to residents and fellows across North Carolina.