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Own Occupation Disability Insurance

Whether you are a medical resident or a seasoned physician, the hard work, time, money and energy invested in your career is substantial. Protecting that investment is of the utmost importance. One way to protect your income is to purchase disability insurance that covers your income if the unexpected occurs – you are injured or become ill and unable to perform the duties of your job. However, not all disability insurance policies are the same. For physicians, own occupational disability insurance provides important coverage.

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Disability Can Strike Anyone, Anytime

The Social Security Administration says that as many as one in four of today’s 20-year-olds will become disabled before retiring. As a physician, you’ll see first-hand how a disability can upend a person’s life, and you are not immune.

While such a turn of events is not desired or wished upon anyone, preparing for disability is better than ignoring the possibility of it occurring. Disability insurance is a practical purchase for anyone who depends on a paycheck, including doctors.

Because you don’t know when a disability might strike, the earlier you purchase disability insurance, the more beneficial it can be. In addition to ensuring that you have coverage when you need it, you can also lock in good rates this way. Discounts may also be available to medical residents.

Look for Key Policy Features

Disability insurance policies can vary substantially, so it’s important to look for key policy features when you’re comparing your options. For example, with the future purchase option, benefits can grow over time to accommodate income changes. Other important riders to consider provide benefits related to student loans, retirement benefits, premium waivers during periods of disability, cost-of-living adjustments and non-cancellable guaranteed renewable coverage.

One of the most important factors is selecting a policy that offers an “own occupation” definition of disability. Let’s take a closer look at what this means and a few other factors to consider.

What Does the Definition of Disability Mean for Disability Insurance?

Whether or not you’ll qualify for benefits often comes down to the definition of disability. Some programs only provide benefits if a person experiences a total disability. This is how the Social Security Disability Insurance program works, and the strict definition of disability contributes to many people being denied benefits.

Some policies, including many employer-provided group disability insurance policies, provide coverage using an any occupation definition of disability. Under these policies, you may not qualify for benefits if you experience a disability that prevents you from working in your occupation but you are still able to work in another occupation.

This can be a big problem for physicians. You’ve dedicated years of your life to develop specialized skills, and that training allows you to command an attractive income. If a disability keeps you from working in your chosen occupation, you may see your earnings drop significantly. As a result, your lifestyle could be put in jeopardy, not to mention your ability to pay student loans, mortgages and other bills.

An own occupation policy addresses this issue by using a different definition of disability.

Own Occupation Disability Insurance

With an own occupation disability insurance policy, benefits are payable if the insured can no longer work in their occupation because of a disability. This is true even if they are able to work in another occupation.

For example, an orthopedic surgeon who suffers a hand injury or tremor may not be able to continue working as a surgeon, but the disability may not be severe enough to prevent the surgeon from finding work in other occupations – likely at a large pay cut. An own occupation disability insurance policy can provide benefits in this sort of situation.

Group vs. Individual Disability Insurance

When employers offer group disability insurance, the policies usually do not use an own occupation definition. Instead, they usually use the more restrictive any occupation definition of disability. These group policies may be more restrictive in other ways, as well. For example, group policies typically aren’t portable, meaning you’ll lose coverage if you change jobs.

This does not necessarily mean that you should reject group coverage, especially if your employer offers it to you at little or no cost. Many physicians purchase both policies – group and individual – to ensure their family has enough coverage in the event of a disability. When purchasing an individual policy, it’s important to look for own occupation coverage.

Different Types of Own Occupation Coverage

Own occupation coverage is important, but it’s actually more complicated than this. There are different types of own occupation disability insurance policies.

True Own Occ

One type is true own occupation policies. This is the most comprehensive and thereby the most expensive type. Let’s say you’re an orthopedic surgeon who can no longer work in your chosen field because of a hand tremor. You don’t like being idle, so you still want to work. You decide to go into another line of work. With a true own occupation policy, you can still qualify for full disability insurance benefits.

Modified Own Occ

A modified own occupation policy is different. If you have one of these policies, choosing to work in another field will cause you to lose benefits. You may have to decide between not working and receiving benefits or working and accepting a smaller salary.

Transitional Own Occ

A transitional own-occupation policy is somewhere in the middle of these two extremes. This type of policy envisions a transition from your old job to a new job. It does not fully value your investment in the original career as the true own occupation policy does, and your benefits will be reduced when you make money in another line of work. For example, depending on the specific terms, if you work in one field that pays $400,000 and switch to another career paying $200,000, a transition own-occupation policy may reduce the amount it pays by $200,00.

Beyond these three types, there are other issues to consider. One is how a true own occupation policy defines your occupation – is it very broad or is it tied to your specialty? This is important because, as you probably know, certain specialties come with much higher salaries. For example, a neurosurgeon can make considerably more than a family practice doctor. This is why specialty-specific coverage is important.

Because of the nuances that exist for own occupation disability insurance policies, you must review policies carefully and asks plenty of questions to make sure you are getting the one that best suits your potential needs. Getting any of these policies earlier in your career will result in the policy being cheaper than if you start when you’re older because the risk of disability increases over time and so does the cost of policies.

Do You Have the Best Own Occupation Coverage?

Your career is the foundation upon which you’ve built your lifestyle. You can protect your income and your lifestyle by purchasing disability insurance. However, not all policies are the same, and even among own occupation disability insurance policies, there is substantial variation. Make sure you’re getting the best disability insurance policy for your needs.

Request a TruSpecialty quote today!

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