Imagine losing your job after an accident that left you injured or disabled. Aside from the mental and physical repercussions of the unfortunate event, you will also need to deal with the financial risks of unemployment. That is why disability insurance is important, as it protects you from experiencing a financial crisis when your income ceases. Specifically, Own Occupation Disability Insurance for Physicians allows you to claim benefits even if you are able to earn through any other job other than your specialty.
Own Occupation Disability Insurance for Physicians
To understand more how Own Occupation policies work, let’s take a closer look at its different elements.
The Definition of a Disability
Not all physician income insurance policies define a disability the same. To qualify for benefits, you’ll need to meet specific requirements up front through medical underwriting. Your policy’s declaration pages will detail the plan you were approved for. Those pages outline the amount of monthly coverage you have, the benefit period, how long the coverage lasts and all riders; in which you become qualified if your physician deems you disabled. Every insurance company offers different types of policies and defines a disability in different ways, but physicians generally focus on purchasing from the “Big Six” carriers who offer Own Occupation definitions. Common definitions of a disability include:
1. Total Disability
This means you are unable to perform the material duties of your specialty or your sub-specialty. Your eligibility and the amount of benefits you will receive will be determined by your policy. Because medical underwriting has been done up front, you won’t have to prove your health history again in the future or in the event of a claim; however, any pre-existing conditions found during your approval process will become exclusions from future coverage.
2. Partial/Residual Disability
With partial disabilities, you suffer from an illness or injury causing you to be partially disabled, resulting in time off the job and/or income loss. This could occur while on your way to a full disability claim or during recovery, post disability. Monthly benefits depend on your policy and are typically calculated using a specific formula. Typically, the benefit triggers at 15-20%+ income loss, after your waiting period ends.
3. Presumptive Disability
Under this disability type, your waiting period is waived. The criteria generally requires total loss of use of both hands or both feet or use of one hand or foot, or to lose sight, speech or hearing to waive the waiting period. You are “presumed” disabled if that is the case. With most carriers, this disability is considered to be permanent with no possibility of recovery by your insurance provider whereas a few carriers will allow the waiting period to be waived even if you could recover. Whether you are under an Own-Occupation or Any-Occupation policy, if you qualify for eligibility due to their provisions, you will receive benefits immediately .
Own-Occupation Vs. Any-Occupation Policy
There are two common types of Disability Insurance Policy – Own Occupation Policy and Any Occupation Policy.
1. Own Occupation Policy
Also known as True Own Occupation or Regular Occupation policy, this policy type lets you claim benefits even if you still have the ability to work in a different job; different from your specialty. Due to medical underwriting being completed prior to paying for this plan, the insured knows exactly how the policy would perform since the approval outlines any exclusions from coverage and the insured has time to review any modifications that may be present due to their health history. Although it is more work up front for the insured to complete medical questions and/or blood draws for underwriting, this only has to be done one time and once approved and initial payments are made, the policy locks in their approval. If additional medical history arises after this point, it won’t count against the client’s future benefits. Own Occupation Disability Insurance costs are generally higher than the Any Occupation type since it allows the insured to double dip if disabled; collecting both income and benefits at the same time.
2. Any-Occupation Policy
Under this policy, you either won’t receive any insurance benefits or a reduced amount if you are still able to work (even lower paying jobs) after an illness or injury. Any Occupation policy has more restrictions, so the premiums are usually less expensive. These plans are generally found through an employer benefit package either for free to the employees but sometimes you have to enroll and pay.
Forms of Own Occupation Disability Insurance
As mentioned, you may not receive any benefits under the Total Disability definition if you are covered by Any Occupation policy. However, having an Own Occupation policy can vary from policy to policy based upon the rider chosen, so it is important for the physician to select carefully. It is then critical to read and understand every part of your insurance coverage before purchasing.
1. True Own Occupation
You are eligible to receive disability insurance benefits even if you become employed in any other occupation. Your benefits will not be affected by your earnings from your new income.
2. Transitional Own Occupation
This coverage pays you disability insurance benefits, which are adjusted to consider the amount you earn from your new job (after the disability). The calculation of your adjusted benefit will be defined in your earnings pre-disability and the income received in the other job; outside of the specialty one worked in prior to the disability.
3. Own Occupation, Not Engaged
This coverage, also known as Modified Own Occupation, has a stricter definition of Own Occupation insurance. You may still be eligible for benefits if you can still do any job other than your specialty, but you become ineligible if you take another job or you would only receive a partial benefit if working in another job under this definition.
4. Hybrid Own Occupation & Any Occupation
Hybrid policies combine the two. If you fall under the Total Disability provision, you will be covered by Own Occupation only for a certain amount of time. After that, your coverage will change to Any Occupation. Generally, the Own Occupation window is 24-months before the change occurs.
What is the Difference Between Own Occupation and Any Occupation?
Under Own Occupation policy, you can receive insurance benefits if you become disabled and cannot perform your regular job you have been specifically trained in. You can still work for any other job and collect the monthly benefits. In contrast, an Any Occupation policy will remove your benefits, making you ineligible if you take gainful employment in job, separate from the one you were just disabled from.
Do we Need Disability Insurance?
The short answer is yes. This type of insurance protects you financially if an unfortunate illness or injury happens, making you unable to perform your duties of your specialty. However, you should also consider this type of insurance policy if you want to get the most out of your insurance coverage to make yourself financially whole.
Indeed, disability insurance is vital for professionals, but especially physicians, who study and train for years to improve the knowledge and skills required by their occupation; specific to their specialty. Having disability insurance helps protect your income and finances in general but if you want to get the best coverage, make sure to look into Own Occupation Disability Insurance for Physicians with Own Occupation riders. This policy type entitles you to receive insurance benefit, even if you can still work in any other job, other than your Regular Occupation. If you are a physician who is contemplating Disability Insurance, or Term Life Insurance, our team here at Crisp Physician Solutions is ready to answer any questions you may have.