Own-Occupation vs. Any-Occupation: Know Your Disability Coverage

When considering various options with disability insurance, two terms you may come across are “own-occupation” coverage and “any-occupation” coverage. It’s crucial to understand the difference between the two: each type requires different criteria that must be met in order to receive benefits, which can make a world of difference to you and your family should you become disabled.

Own-Occupation Disability Insurance

“Own occupation” refers to the occupation an individual was regularly engaged in when he or she became disabled. Some insurers define it more widely, noting it as the occupation that was engaged in for one year prior to becoming disabled. Own-occupation disability insurance covers individuals who cannot perform the specific duties that they have been trained to perform at their jobs. In order to receive benefits, he individual must be employed at the time the disability occurs.

If, due to a disability, one can’t perform the duties of his or her own occupation, that person would receive a benefits, even though he or she could work in a different profession,. For example, if a dentist becomes disabled by severe hand injury, rendering him or her unable to work as a dentist, even though he or she goes on to teach in a dental program, he or she would still be entitled to own-occupation benefits because of the inability to perform the job he or she spent many years training for and performing.

“Modified Own-Occupation” Disability Insurance

There is also a “modified own-occupation” definition of disability in some policies. In the above example, with Modified Own-Occupation coverage, the dentist would still be covered if he or she couldn’t work as a dentist due to the hand injury. However, with this Modified coverage, the benefits would not be paid if he or she chooses to work in another occupation.

Any-Occupation Disability Insurance

If a person has “any-occupation” disability insurance, he or she will only receive benefits if the duties of any type of work for which they’re reasonably suited cannot be performed, based on criteria such as education, training, experience, and age.

When you work in a professional occupation that requires a high level of skill, you’re required to perform high-level job functions. It’s possible that you could experience a disability that might allow you to continue working in another type of job, but not in your own occupation.However, after working for years to build a successful career, surely you don’t want to be forced to start over in a different, lesser paying occupation, as the result of a disability.

Why Own-Occupation Insurance is Preferred

Own-occupation coverage is generally considered superior to any-occupation insurance because insured individuals are more likely to receive a benefit if they become disabled. If a surgeon has own-occupation insurance and injures his hands, he could become a general practitioner and still receive full disability benefits, too, for example.

With own-occupation coverage, insured people are not penalized for going back to work in a different occupation while receiving benefits. Likewise, they don’t risk having their insurance company deciding whether or not they are able to work in another profession. If they become sick or injured while they are employed, they are considered totally disabled, even if they are able to perform the duties of another occupation.

Consider Coverage Options Carefully

Watch carefully to make sure you avoid disability policies that only pay benefits if you’re unable to work in “any” occupation or in “any suitable” position. When you want to protect the income level you’ve worked so hard to achieve, what you need is “own-occupation” disability coverage.

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Richard Reich

CEO - Licensed Agent

Richard Reich CEO and Licensed agent

In my 20+ years as an independent life and disability insurance broker, I have personally assisted thousands of clients with their life and disability insurance needs.  Being independent, I represent many highly-rated insurance companies and, because I am not beholden to any one insurance company, my focus is to find the right company and policy for each individual client. I believe that when people shop for insurance (or anything else, for that matter) on the Internet, they are looking for a simple, non-intrusive, non-pressure method of doing so.  I strive to treat my prospective clients with the utmost respect and I believe an educated prospect can make the right decision without sales pressure. Please feel free to contact me at your convenience.