Own-occupation disability insurance

Submitted by Anonymous (not verified) on Mon, 03/08/2010 - 09:42

The agent had mentioned that my disability insurance offers an own occupation policy that's modified and "offsets" any other form of income. He's tried to explain it to me in his own way, but the thing is perhaps a bit complex for me to understand.

Posted: 09 Mar 2010 07:03 Post Subject:

Well, this is actually pointing to a larger problem than we could perceive. Some disability insurance carriers are now mentioning the term "own-occupation" in their policy clauses, even though their offers are not a pure own-occupation coverage offer.

Apart from the leading insurance carriers, other mainstream professionals have also met with this challenge. While most insurance carriers are demanding that they're offering "Own-occupation", in reality the definition of 'total disability' varies considerably.

Posted: 10 Mar 2010 02:07 Post Subject:

Modified own occ coverage means you are considered disabled and eligible for benefits when you...

1.) Lack the ability to perform the material and substantial dutied of your own occupation


2.) You are not employed in any other occupation earning an income.

If it were purely own occ, you'd be eligible for benefits if you met condition number 1 from above; condition 2 is illrevent. Meaning you can work and make money and still receive benefits from your disability insurance policy if it is pure own occ, but not if it is modified own occ.

Posted: 10 Mar 2010 04:49 Post Subject:

I've seen them where they'll pay on an own occ definition for the first two years or so and then revert to an any occ definition for the balance of the benefit period.

InsTeacher 8)

Posted: 10 Mar 2010 07:56 Post Subject:

These new "Own-occupation" policies are actually a form of income replacement policies. I guess the original definition stated that the insured is supposed to get reimbursed under circumstances when he's not being able to perform his usual duties, even though he might be able to do any other work.

These new policies will certainly cut down your disability benefits in case you're engaged in any other job.

Posted: 10 Mar 2010 02:31 Post Subject:

I've seen them where they'll pay on an own occ definition for the first two years or so and then revert to an any occ definition for the balance of the benefit period.

Yup, and my opnion the worst of them all. The conversation then turns to, well after two years if you can work somewhere else and make 60% of your regular income your insurer is going to stop sending the check. By the way, that's why it so cheap... :roll:

This goes by a few names usually own-occ transitioning to any occ, or (x) years own-occ

Posted: 11 Mar 2010 02:13 Post Subject:

The policies in which the definition changes are typically pretty bad policies.

In most, but not all, cases it is ok to have a modified own occupation definition like BNTR is describing.

With this type of definition, the insurance company couldn't force you to do something else. They also couldn't pay you less simply because you are capable of doing something else.

Posted: 11 Mar 2010 07:24 Post Subject:

You may not be entitled to a contract of absolute own-occupation some where else, if you've come across the term "any other occupation" in the total disability definition. But, you must first understand that 'own-occupation' is not the only important characteristic of a disability insurance policy.

Posted: 12 Mar 2010 05:22 Post Subject:

All types of occupations don't satisfy the pure own-occupation criteria. A number of occupations will only fulfill a pure own-occupation policy criteria for 5 years. Under such circumstances, you may get an altered own-occupation with a specific company along with pure own-occupation with a different co. till 65.

Posted: 13 Mar 2010 03:40 Post Subject:

My friend...just don't forget to ask a question to your agent before you'd sign-up for a policy. Ask if it's a contract of pure own-occupation till the age 65, or if it's a modified policy that makes up for any other income while you've filed a claim.

Some carriers have chosen to sell a new wine in an old bottle!

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