Disability insurance is one of the most important and complex types of coverage a person can obtain. Although the concept that Disability insurance protects your income is fairly simple to understand, there are so many provisions, definitions and optional riders available that it can make decision making very difficult when purchasing a policy. The definition of disability, which describes the circumstances in which you are eligible for a claim, is one of the more important provisions to review and understand when purchasing your Disability coverage.
Without going to far into detail, there are three basic definitions of total disability that you will want to be aware of: A True Own-Occupation definition of total disability which covers your specific occupation and will pay benefits regardless of you working in a different occupation; a Modified Own-Occupation definition which covers your specific occupation but will only pay benefits if you are not working; and an Any-Occupation definition of disability which will only pay benefits if you are unable to do any reasonable occupation for your education and experience.
For specialized, lower risk occupations a True Own-Occupation definition is usually what professionals will purchase. With higher risk occupations however, not many companies will offer the better definitions of disability, and those that do will normally be priced too high. Physical therapists, for example are highly educated, trained and specialized professionals, but are normally classified in a higher risk category. This is a professional who should have Own-Occupation Disability insurance protection, but may not be able to afford it.
Unfortunately in most cases, the companies that offer affordable policies to these specialized, higher risk occupations will traditionally provide a modified Own-Occupation definition for the first 24-60 months of a disability claim, but then change to an Any-Occupation definition thereafter. Many people give in to the mentality that if they are not able to work in their current occupation due to a disability, they will not be able to do any other occupation either. The fact of the matter is that dealing with a disability is not that simple. Most disabilities are caused by illnesses and most illnesses do not just appear from one day to the next or affect every occupation in the same way. The reality is that if you can avoid having the Any-Occupation definition, you should do so because it may end up saving you a lot of trouble.
The decision you will most likely have to face is whether you want a less expensive policy that offers you an Own-Occupation definition for 2 years and then changes to an Any-Occupation definition, or a slightly more expensive policy that provides the Own-Occupation definition for 5 years before changing to an Any-Occupation definition. Just because the insurance agent you are working with does not show you this second option does not mean that the insurance company does not offer it. Some insurance companies allow you to purchase this extended Own-Occupation period with an optional rider. Ask your agent to show you this option.
The average Long-Term disability claim lasts 2.5 years. By accepting a policy that only provides you with a 2-year Own-Occupation definition of total disability, you are not even providing yourself with proper protection for the duration of an average claim. Don’t cut yourself and/or your family short when protecting something as important as your paycheck.
