Disability insurance is a type of insurance that offers protection for your income in the event that because of a disability, injury, or illness, you become unable to work. Because the majority of people depend on their monthly incomes to provide for themselves and their families as well as pay for living expenses, nearly everyone should consider owning disability insurance. Disability insurance pays you a percentage of the income you would be receiving were you able to work.
Financial experts compare disability insurance to life insurance in terms of requirement. In fact, disability insurance is sometimes considered more important than life insurance, because it protects your livelihood and your family while you’re living. Your chances of developing a disability that prevents you from being able to work for some period of time are higher than your chances of dying.
You may already be familiar with disability insurance through your place of employment. Employers frequently offer disability insurance as part of a benefits package. Additionally, disability insurance can be purchased individually through an insurance agent or company.
Every insurance company and every disability policy varies. They each have different options, and getting the best policy means understanding what it is offering. This includes a policy offered by an employer. When considering the purchase of disability insurance, whether through an employer or individually from a company, one of the most important factors that should affect your decision on a particular policy is its definition of disability.
Insurance providers can define “disabled” in two ways:
– Any-occupation (any occ)
Under this definition, a person is only considered “disabled” and may only receive benefits if they are unable to work in any occupation, not just their own. For example, an attorney may develop in injury or illness that causes him to be unable to work. When the attorney files his claim however, the insurance company will not provide benefits, because he technically can find work that accommodates his disability. Only after you have proven that you are unable to work anywhere, do you receive disability benefits.
– Own-occupation (own occ)
This definition stipulates that a person is “disabled” only if they are unable to work in their own occupation. If, for example, a dentist becomes injured or ill and is unable to work for a period of time, he must only prove that he is unable to perform his own occupational duties to receive benefits.
Which Definition Do You Want?
Insurance experts unanimously agree that “disability” should be defined on your policy as own occupation, sometimes referred to as “own occ”.
An own-occupation definition on your disability policy prevents you from having to find work you are not accustomed to doing, or in a field you have little or no experience in. You would not have to find a new type of work more accommodating to your disability to receive benefits.
An any-occupation definition on your policy means you may be forced into a new line of work before you are eligible to receive benefits, even if the type of work pays you less than your previous type of work, or you have to take on special training or schooling to perform the work.
An important point to consider however, are the costs of these definitions. A policy with an own-occupation disability definition is going to have a much higher premium than a policy with an any-occupation disability definition. Additionally, an own-occupation definition may only be available to you if you have a clean medical record and work in a low risk occupation.
Occasionally, a policy with an any-occupation disability definition may be modified to allow consideration to your education, training, and earning level.
Disabilities Covered by Insurance
Insurance companies also have ways of defining which actual disabilities are available for benefits. Normally, any disabling illness or injury that occurs during a period where you are working is covered by disability insurance. Disability-covered illness may also umbrella mental-related illnesses. Loss of a limb may only be covered by special policy options you should inquire about when discussing disability insurance with your insurance agent or company.
Generally, any injury, illness, or disability sustained during a period where you are gainfully employed is not eligible for benefits if it occurred as a result of attempted suicide, drug abuse, war, or an attempted crime.
Because every policy varies so greatly on what it does and does not cover, it is important to fully discuss the policy package and all available options with your insurance agent or insurance company so you can obtain the best disability insurance coverage.