Nearly every insurance expert will advise doctors it’s important to own a disability insurance policy with an own occupation definition of disability written into the contract. That’s in contrast to the less desirable “any occupation” definition included in many contracts.
For physicians, an own occupation policy is far more likely to actually pay out a benefit. There are just too many exclusions and ‘outs’ for the insurance carrier in an any occupation policy to make it worthwhile for physicians. Because an any occupation policy only pays out benefits if you can work at any occupation, in or out of medicine, you could pay premiums for years, only to be denied at claim time, because the insurance company counters that you could work in some other occupation besides the one you trained for and have set up your life around.
So owning an own occupation policy is important for physicians. But not every policy is created equal. There are, in fact, a number of important differences, even among own occupation disability insurance policies.
Usually, we recommend the best policy with the broadest definition of insurance that you can afford and that you can qualify for.
Here are some different varieties of own occupation disability insurance and the differences between them.
Own Occupation (Not otherwise specified)
These policies pay benefits based on a very general definition of ‘occupation.’ For these policies, a doctor is a doctor is a doctor – and if you can conceivably practice in another specialty, one of these policies may not pay a claim.
While these are the least desirable of the own occupation policies, they do serve an important niche in the physician community: They may be a good choice for certain medical specialties that are not terribly physically demanding. For example, a pediatrician or psychologist may choose one of these policies.
They tend not to work well for surgeons, ER doctors or anyone who needs to be on his or her feet for hours at a time. If you can’t practice your specialty with a bad back or neck injury, you’ll probably want to invest in a policy with a stronger definition of disability.
Specialty-Specific Own Occupation
These polices define disability as the inability to continue to work as a physician within your own specialty. These may be a bit pricier, but if continuing to practice in your specialty is important to you, these policies may work out well.
Own Occupation (Actual Duties)
This definition is stronger than specialty-specific, in that it defines your profession as performing the actual duties that you were performing on a regular basis at the time you filed your claim.
If you can’t perform one of those regular duties, you would be considered disabled under the terms of the policy.
This type of policy is hardly ever offered within an employer group plan. If you want it, you’ll almost certainly need to get it from an agent serving the individual market. (Hint: That’s us.)
True Own Occupation
These policies enable physicians to collect a full disability insurance benefit even if they’re earning a significant income in some other occupation. For example, if a disability knocks you out of working as a surgeon, you can still collect a full benefit while teaching medical school.
You will be totally disabled if, solely due to injury or sickness, you are unable to perform the material and substantial duties of your occupation. As long as you are totally disabled, benefits will not be reduced even if you are working in another occupation. If you’re a dentist or physician who has limited your occupation to the performance of a single dental or medical specialty, the best insurance companies will consider that specialty to be your occupation.
Enhanced Own Occupation
This definition is only offered by a single carrier at present, serving the individual market. With this plan, if you can’t do surgery or some other regular demanding function of your practice because of your disability, but you’re still able to generate a significant income working in your specialty, you can collect the full disability benefit. This is true even if you’re working.
This may be a good option for you if 50 percent of your income or more comes from doing procedures that require strength, dexterity, or for you to be on your feet for a long time, but you can conceivably continue to work without doing these procedures.
Modified Own Occupation
With these plans, if your disability forces you to switch to a lower-paying specialty but you can still work as a physician, the insurer will make up the difference in pay. These are economical alternatives to actual duties own occ policies.
You can’t earn full disability benefits as you might be able to do under the enhanced own occupation definition above. But you can protect your income against more mild disabilities.
What’s the right decision for you?
The answer depends on your own individual situation, your actual day-to-day duties as a physician, and your physical health. Typically, the more generous the definition of disability, the stricter the medical underwriting, and the more difficult the policy will be to qualify for.
Remember, more than 25 percent of today’s 20-year-olds will experience a disabling disease or injury that will keep them out of work for at least one year before they reach retirement age. Many will be disabled permanently.
