The many definitions of disability and why it’s important to know yours
What type of Disability Insurance should I have?
Disability income insurance is a very simple product with some very complicated language inside of the contracts themselves. Having an agent capable of explaining this language to you, and what it means for you if you become disabled is important.
Disability insurance is a risk management product that will pay you an income stream if you are too sick or hurt to go to work. It comes in both short term and long term with differing waiting periods and benefit periods designed to insure the risk of differing lengths of disability.
Perhaps the most important language in a disability contract is the definition of disability. This definition determines whether or not the insurance company pays the benefit depending on what type of work you’re not able to do.
There are three main types of definitions of disability:
- Any occupation – This definition means that if you can perform any job that matches your education, skills and experience level you are required to do so. You would have to be totally disabled and unable to perform any occupation in order for the insurance to pay your claim. Many group disability policies paid for by employers have this definition and it is the standard definition for Social Security disability payments as well.
- Own occupation and not working – This definition is much better than any occupation because it stipulates that you cannot perform the substantial and material duties of the job you were performing when you became disabled. So if you’re a dentist and your disability prevents you from being a dentist then the insurance company will pay, regardless of what other occupations you could perform with your disability. This definition does prevent you from working for wage or profit in another occupation while receiving the benefit.
- True own occupation – This definition of disability is the gold standard for definitions because you’re only required to be unable to do your specific job but you can also be working for wage or profit in another occupation without negatively affecting your benefit. This means someone could be receiving a disability benefit because of their inability to be a surgeon while still receiving an income to teach classes at the local university.
Certain occupations considered higher risk are not eligible for certain definitions of disability. Those that are will pay a premium for the better definitions, but the additional cost is well worth not worrying whether or not your claim will be paid.
Professionals who have invested highly in their education and who are paying back hefty student loans are especially vulnerable without the appropriate coverages in place. However, everyone should have a plan for a disability and how they will provide for themselves and their families if the tragic scenario happened to them.
At Stolly Insurance Group we have the expert insurance professionals who know the details of these policies and we can advise our clients on what they need to know. If you’re unsure about your disability coverage Contact Us to schedule your consultation.