Guardian vs. Ameritas: A Detailed Guide to Own-Occupation Disability Insurance

Guardian and Ameritas are two of the “Big 5” companies that offer disability insurance. High-income professionals like doctors, dentists and veterinarians might be familiar with true own-occupation coverage being essential. But when it comes to the nitty gritty details, only an agent can get into the minor specifics that make one policy better for the client over another, even when it looks like the same coverage from a bird’s eye view. 

Before diving in, know that this article isn’t a complete list of the pros and cons of both companies’ policies. As much as I would love to spill all the tea, it’s important for me as an independent agent to maintain good relationships with all five companies (Guardian, Ameritas, MassMutual, Principal and The Standard), and putting some things in writing could be… not conducive to that.

Own-occupation disability coverage: Ameritas vs. Guardian

Both companies provide true own-occupation definitions of disability. Physicians might have heard of this as “specialty-specific,” which is a marketing term towards doctors, but it’s the same thing. 

Own-occupation (own occ) means that the company will pay your full disability benefits if you are unable to do your original job. True own-occupation means that they will pay even if you can work another full-time job. Both companies offer a range of these definitions. Let’s break down each one.

A closer look at Ameritas coverages

Ameritas has a few degrees of “own occ” definitions. Here are the differences.

• Own occ for the length of the benefit period: This one is the true own occ. This is usually the one for you if you're a high-income professional. Suppose you’re a surgeon and develop hand tremors, for example. In that case, this policy pays benefits every month until age 65, assuming that’s the benefit period you opted for when you applied for the policy.
• Own occ and not working for the length of the benefit period: This means that if you become disabled, Ameritas will reduce your benefits if you decide to work another job and earn supplemental income. If you can’t do your original job, you’d have to basically sit on the couch at home. It's not ideal for those with really driven personalities who love to work, but if someone paid me to stay home and play games, I’d go for that.
• Two-year own occ, then any reasonable occ thereafter: I’d generally only recommend this one if you need coverage and you need the premiums to be much lower. Basically, after two years, they’ll stop paying benefits if you’re able to work another job. This protects mainly from permanent disabilities.

Note that for high-risk professions like firefighters, dental hygienists, or massage therapists, Ameritas will usually only offer the last two definitions of disability. Unfortunately, high-risk occupations also frequently come with limits to the benefit period (like only five years of benefits instead of to age 65).

Related: Ameritas Disability Insurance Review: Features and Riders for Physicians

Exploring Guardian’s disability protection

Guardian has one main own occupation coverage option. But don’t let that discourage you — I’ll show you an example of when it might be a better option than Ameritas.

• Enhanced true own-occupation: This is Guardian’s bread and butter. There are multiple levels below this, but this is why people sign up for a Guardian policy — for the purportedly strongest coverage there is. 

Let’s examine the contract language that makes this so special:

“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. You will also be considered totally disabled if you are an MD or DO and more than 50% of your income is from: Performing surgical procedures and, solely because of injury or illness, you can no longer perform surgical procedures – or- Performing Hands-on patient care and, solely because of injury or illness, you can no longer perform hands-on patient care.”

Related: Guardian Disability Insurance Review For Physicians: Best Enhanced Coverage?

A Guardian policy in action

Now, let’s consider a test case where this policy would be amazing. 

Suppose Terry works as a urologist at a university hospital. Terry has an interesting job where only 60% of their job is surgery, and they’re doing research for the other 40% of the time. Their annual salary is $400,000 with no group coverage, so they have a Guardian policy that pays out $15,000 monthly with a benefit period to age 65 if disabled. 

After a couple of years, Terry develops those nasty hand tremors we talked about earlier, so they can’t do surgery anymore. The hand tremors don’t interfere with their research, so the university says Terry can do that full-time instead. 

Did you catch what that would mean? Sixty percent of Terry’s previous work was surgery. Now that they can’t do it, Guardian considers them totally disabled and will now pay $15,000 a month (tax-free, since Terry paid the premiums with post-tax income) until they turn age 65. Meanwhile, the university is still paying them their full time physician salary?!

In this instance, the own-occupation coverage provided by Guardian is technically stronger than Ameritas, which is why it tends to be more expensive. 

However, consider how this 50/50 split would apply to your specialty if you were a physician. The cases where a Guardian policy pays out and an Ameritas one doesn’t are pretty rare, in my opinion. In fact, even though Ameritas’s disability definition didn’t specify that it would pay out in this situation, it also didn’t say that it wouldn’t, so there’s a possibility that an Ameritas policy would still pay you in this particular situation, too.

Now that we've covered the definitions of own-occupation disability, let's look at how the cost of these policies can vary with different premium styles.

Premium styles: How Ameritas and Guardian compare

Guardian and Ameritas offer level premiums, where premiums stay the same every year as long as you don’t purchase additional coverage. However, of these two, only Guardian offers graded premiums as an alternative option. 

While level premiums spread the risk associated with your age over the lifetime of the policy, graded premiums calculate your premium based on the actual risk factor associated with your current age. Which means they get more expensive every single year. 

This can make sense for residents, allowing them to pay much lower premiums until they become an attending, and then the future premiums being much higher don’t bother them as much anymore. 

Graded vs. level premiums

In my experience, the breakeven point of graded vs. level premiums is typically around year 10. After that, graded premiums will likely be more expensive on a per-year basis. However, if you’re a FIRE type (financial independence, retire early), graded could make a lot of sense. Lower premiums upfront mean more money saved to invest instead, speeding up the timeline for your work to become optional. 

If you no longer need a full-time income after 20 years and retire early, you could cancel your policy before the premiums become too expensive to stomach. Graded premiums can also be switched later to level premiums. For the penny-pinching residents out there, that would be a great strategy for you.

One important note: Be wary when receiving quotes from insurance agents. I’ve noticed many others will always quote Guardian as graded, making it appear cheaper than the other companies’ level quotes. Always ask if what you’re seeing from each company is apples-to-apples the same thing.

Now, let’s look at some unique policy features that can set these companies apart.

Unique policy features that could make a difference

Companies like adding freebies into their policies that they can use to distinguish themselves from the competition in their marketing. They’re essential to know because they could contain benefits you didn’t even realize you were eligible for when the time comes. 

Here are some of them.

Guardian policy features

• Hospice Care Benefit: If the insured is admitted to a hospice program, they’ll be considered totally disabled, and the elimination period is waived.
• Unemployment Premium Suspension: If unemployed, the insured can cease premium payments for up to 12 months. The policy won’t be canceled, but no coverage is offered either.

Ameritas policy features

• Benefit Advancement: They’re willing to advance $500 of your benefit if you suffer an injury requiring treatment by a physician or repair to natural teeth by a dentist. If disabled after the elimination period, they will reduce the first month's benefit by $500.
• Good Health Benefit: Every consecutive year without receiving benefits from the policy will reduce the elimination period by two days, but it will not go lower than 30 days. Fifteen years with no problems would bring a 90-day waiting period down to 60 days.
• Surgical Transplant Benefit: If part of your body is transplanted into another body and the insured becomes totally disabled as a result, Ameritas will pay benefits as if it were due to a sickness.
• COBRA Premium Benefit: If you become unemployed due to a disability and are paying COBRA premiums, Ameritas will reimburse you up to $1,000 per month for up to 18 months (shorter if the policy benefit period is shorter).

As you can see, this is a pretty random assortment of benefits. Most people won’t know their policies contain these things unless they read their entire policy or quotes carefully.

Ameritas and Guardian can also differ greatly depending on several factors such as occupation, age, medical history and state of application. These can change the amount of benefit both companies are willing to offer, the benefit period and even whether some riders are available. 

Tailoring your disability insurance to your needs

While both Ameritas and Guardian offer robust own-occupation disability insurance policies, the subtle differences can impact your coverage in a big way. Trying to list all of those here would require thousands of independent variables. Given the complexity and the numerous factors that could affect your decision, it's essential to consult a licensed agent who can tailor a policy to your specific needs.

If you’re ready to talk to a licensed agent about your options, fill out our quote form below, and I’ll be happy to help you find the right coverage.