Law firm employees

The Definition of Disability

One of the first things that you need to understand about Long Term Disability Insurance is the definition of disability. There are three common definitions.

 

Own Occupation Definition

The Own Occupation definition is the most liberal offered and is usually made available only to individuals in lowest risk occupational classes. Own Occupation protects the insured in his/her particular job. It is usually offered as a rider at an additional cost.

A typical own occupation definition might read as follows:

Total disability means that due to injury or sickness:
a) You are unable to perform the important duties of your own occupation; and
b) You are under the regular care of a physician

Under this definition, you could be unable to perform the duties of your own occupation, but could earn an income in another occupation while still receiving full disability benefits.

 

Regular Occupation

The regular occupation definition is similar to an Own Occupation benefit, but unlike the much more expensive own occupation contract, most Regular Occupation contracts would reduce or cease benefits if you went back to work in a completely different occupation. However, many people do not see this as a contractual weakness in their protection.

A typical definition of regular occupation might read as follows:

Total disability means that due to injury or sickness:
a) You are unable to perform the important duties of your own occupation;
b) You are not working in any other occupation; and
c) You are under the regular care of a physician.

 

Any Occupation

The Any Occupation definition is the least liberal of the three definition types. Any Occupation measures total disability based on the insured’s ability to work in any occupation for which they are reasonably fit to perform by education and training. A typical definition might read as follows :

Total disability means that due to injury or sickness:
a) You are unable to perform the important duties of any gainful occupation for which you are reasonably qualified, based on your education, training, or experience; and
b) You are under the regular care of a physician.

Under this definition, if you are able to perform the duties of any occupation as defined above, the insurance company can cease claim payments. The insurance company does not consider the availability of a job, only your ability to perform the duties of one. Keep in mind that the insurance company must take into account your education, training, and experience.

 

Definitions of Group Disability vs. Individual Disability.

Now that you understand the different definitions, you would think that it would be relatively easy to know what you’re buying. Not so.

Some insurance policies have a tiered definition. For example, the definition might say that the policy will pay benefits if you are unable to do the regular duties of your own occupation only for the first 24 months. After which time the definition will reduce to being unable to do the regular duties of any occupation. This is very common in employer sponsored group plans.

You also should be aware that Group plans often refer to their definition as Own Occupation, when what they really cover is a Regular Occupation definition. Therefore, it’s very important to actually read the contractual details of any definition of disability and not just rely on the words ‘own’, ‘regular’, or ‘any’.