Do you need benefits from long-term disability insurance?
If so, you may want to familiarize yourself with certain disability definitions, such as Own Occupation DI, Any Occupation DI, and Regular DI.
But before that, you should understand the importance of a disability insurance (DI) policy and how it benefits your financial stability. It can be a short-term policy or a long-term one. Also, disability insurance can be individually purchased, or it can be provided by the employer in the form of a group long-term disability insurance plan.
Each insurance company has a different definition of disability. Understanding the terminology used to describe disabilities by your insurer is crucial. That’s because, depending on it, differing standards for receiving benefits may apply. So, before accepting an insurance company’s offer, be sure to read the full details.
To understand when you can make a benefit claim under your individual and group insurance. It’s crucial to understand the distinctions between these terms. Let’s dive in.
1- Own Occupation Disability Insurance:
An Own Occupation disability insurance policy is great for people who, due to an illness or injury, become disabled to perform the specific duties of their own occupation. This happens due to total disability. But they can still work in some other full-time occupation.
For example, a general surgeon loses the ability to perform surgeries because of an accident. But they can still work as a lecturer even if they cannot continue performing surgeries. If they have coverage from an Own Occupation DI, they can receive benefits from their insurance policy. And earn a full-time wage from the other job they are doing now.
Own Occupation DI is essential for professionals like physicians, lawmakers, and other professionals. Some other occupations also gain from this kind of insurance.
This definition of disability is only applicable to occupations where you have a strong desire to resume your career. Such as law, accounting, medicine, and other skilled fields. Otherwise, it can lead to “over-insurance.” Because you would be receiving income from two sources despite being incapacitated in your own field of work.
2- Any Occupation Disability Insurance:
In this case, total disability is characterized by your inability to carry out essential functions. For which you are qualified according to your degrees, skills, or work experience in an “any occupation” policy.
This means that if you are unable to perform your own job. But if you can perform a task that is related to your profession, your coverage could stop.
The insurance provider may conduct an occupation test. If you can find another profitable job, the payments will stop.
So, returning to the earlier example. The surgeon who lost their skills to perform surgeries. They will no longer receive insurance benefits. Because they are still qualified to work as a lecturer. Given their background in education, training, or work experience.
Because of the more inclusive definition, insurance for any occupation is the more desired option.
3- Regular Occupation Disability Insurance:
You can’t accomplish your job tasks and are not engaged in another lucrative occupation, according to a “regular occupation” policy. You won’t be regarded as disabled if you’re able to still operate in an alternative position.
In the case of the surgeon working as a lecturer, as in our earlier scenario, they would not be regarded as disabled. And so, they would not be eligible to continue receiving disability benefits. They can decide not to be working as a lecturer and continue to be covered by the claim, unlike with any other career.
This is the factor that differentiates own occupation from a regular occupation. It’s the capacity to continue receiving compensation. Especially, while pursuing a new profession for the later definition.
The insurance provider wouldn’t provide disability insurance to the surgeon who decided to work as a lecturer. Especially, if they had a regular career.
How to get your Own Occupation Disability Policy?
You should look at your options if you’re seeking an “own occupation” disability policy.
“Group long-term disability insurance” and “Individual disability insurance.” These are the main sources of disability income. Now, the question arises that what sets both these providers apart and how can you make a choice?
1- Group long-term disability insurance:
Employees with disabilities can replace their income thanks to group long-term disability insurance. It is often provided by employers as a part of the perks that employees receive.
Your living expenditures are covered by a long-term disability plan. And it provides you with financial stability in difficult times.
In the case of the Group Long-term Disability Plan. The first definition of “disability” to appear is regular occupation. The definition changes to “any occupation” after 2 years of disability. But it makes it more difficult for you to be eligible for payments.
Although your company usually covers your LTD benefits, as costs rise, this is happening less frequently. You will so either find minimum coverage or none. In that situation, you’ll need an Individual Disability Insurance policy. The fact that Long-term Disability Insurance rates are tax deductible eases some of the strain on companies. But it lowers the taxable income of the employers too.
2- Individual disability insurance:
It’s generally advised to have individual disability insurance coverage if you are self-employed.
If a disability prohibits you from working, this will assist in protecting your income. Additionally, it might be a good idea for individuals who are employed. But they don’t have any access to group long-term disability plans or some other coverage plan.
So, anyone can get an individual disability insurance policy if they don’t have any other insurance.
You can even customize your Individual policy to suit your preferences. This includes deciding on your definition of “disability” based on your needs and financial situation.
It can be a good idea for you to include this disability policy in your financial plan. Especially, if you have dependent family members whose well-being depends on your income.
So, you see, the definition of disability in your policy determines whether you are eligible for disability benefits.
It is more difficult to qualify for benefits under the “any occupation” definition. Because its regulations are stricter than the others.
Regular employment makes it simpler to file a claim, but it’s not the greatest option for you.
Own occupation is unquestionably the best sort of disability insurance because it provides you the most flexibility to receive coverage while performing a different job.