For the purposes of determining the exact circumstances under which an insured may be entitled to benefits under a disability income insurance policy, Total Disability can be defined in two general ways:
Own Occupation Definition of Disability Under this definition, total disability means the inability to work at your regular occupation – that is to perform the material and substantial duties of your occupation.
Any Occupation Definition of Disability Under this definition, total disability means the inability to work at any occupation. This definition is sometimes softened by the addition of the following words – the inability to perform the duties of any occupation by which the individual is suited by training, education or experience.
Modified Own Occupation Definition of Disability The insured is totally disabled if unable to perform the material and substantial duties of your occupation and not working in any occupation.
Why True Own Occupation as a Definition is Best The best disability insurance policies contain the true Own Occupation definition because it is much more favorable to the insured. The Own Occupation definition recognizes that a loss of regular occupation usually results in a drastic drop in income even if other employment can be found. Let’s look at an example:
Suppose a heart surgeon earning $500,000 per year suffers an injury to his hands. The injury keeps him out of the operating room but he takes a job as a medical director for an insurance company where he earns $150,000 each year.
Under an Any Occupation or Modified Own Occupation definition of disability, the surgeon would not be considered totally disabled since he was gainfully employed. Under the true Own Occupation definition, however, the surgeon would be considered totally disabled and would receive full benefits under his policy. Those benefits would help to make up his $350,000/year drop in income
Specialty Wording: What if our surgeon went into family practice instead of the insurance company position? He’s still a practicing medical professional so would he still qualify for full benefits under his policy? Under the best disability insurance policies he would qualify since these policies have a specialty definition of disability wording written into the contract. Specialty wording states that if a professional has limited his or her practice to a recognized specialty, that specialty will be considered his or her occupation for the purposes of the contract.