Disability Insurance – different occupation definitions

Today I will explore some of the different definitions that can be in disability insurance policies that relate to your occupation. Essentially there are 3 main types of DI policies re your occupation. Own Occupation, Regular Occupation and Any Occupation. There are 1 or 2 companies that add some little twists, but these are the main types of contracts.

OWN OCCUPATION – this type of policy pays the benefit if you cannot do “substantially all” of the duties of your own occupation. A surgeon for example, who cuts off 5 fingers on one hand while building a sundeck, is not going to be able to be a surgeon any longer – despite the fact he/she could still be a radiologist, conduct research or become a family doctor, the plan would pay.

REGULAR OCCUPATION – this type is one-step down in the hierarchy of plans and is good middle-of-the road coverage at a more modest cost than the OWN OCCUPATION plans. The difference, to use the previous example of the doctor, is that with this type of contract, few if any benefits would be paid because the REGULAR occupation is that of a medical doctor – surgeon is a specialty – but he/she could still practice medicine.

ANY OCCUPATION – this type of policy is the least expensive since no benefits will be paid as long as the insured can perform the regular duties of any occupation for which they are qualified by reason of education or experience.

Some contracts will have split definitions such as 2-year OWN OCCUPATION protection followed by REGULAR OCCUPATION. In this situation, our surgeon would get full benefits for the first 2 years and nothing thereafter.

Based on statistics, there is a 1 in 3 probability of a person age 20 suffering a long-term disability before they reach age 65. Once they are disabled, current figures indicate the average duration of disability at approximately 2 1/2 years. This is very important coverage that should be carefully considered by everyone. Make sure you provide full disclosure to your insurance advisor about your health, occupation and recreational activities and get the most appropriate coverage for the risks you face on a daily basis!