Own-Occupation Disability Insurance: What It Is and Why You Need It

Most physicians understand the premise behind disability insurance: if you become disabled due to an injury or illness, you can receive a monthly benefit. But you might be dangerously underinsured if your policy doesn’t have a true own-occupation definition. 

An own-occupation disability insurance policy pays you if you can’t work in your occupation or specialty, even if you can earn an income in another profession.

Own-occupation disability insurance is essential for physicians who’ve spent hundreds of thousands of dollars on medical school, as well as a decade or more on training to be experts in their field. Keep reading to learn how own-occupation disability insurance differs from a typical disability policy.

What is own-occupation disability insurance?

Own-occupation disability policies provide income protection based on your specific occupational duties at the time of your claim. Therefore, you’re able to receive disability benefits even if you’re able to work in a different capacity.

For physicians with specialized training, this is a huge benefit that can protect your high income, as well as your educational investment.

Own-occupation vs. any-occupation disability insurance

When you file a disability claim, you need to meet the policy’s definition of total disability in order to qualify for benefits. An own-occupation policy provides the most protection because it's based on the substantial duties of your regular occupation or specialty. An any-occupation disability policy, on the other hand, carries a much more narrow definition of disability that’s focused on your overall ability to work.

Because of this, any-occupation coverage is a lot cheaper than an own-occupation policy, which is why many people choose it. However, this can be a costly mistake for physicians and other high-income earners.

With an any-occupation definition, there’s a good chance you’ll be blindsided when it’s time to file a disability claim. It’s a lot harder to qualify for total disability benefits because you might still be able to work — just not in the field that you spent years dedicating your life to. In this case, you could be stuck with a much lower salary and a denied disability claim. 

If you're currently a resident who needs a true own-occupation insurance quote, we can help. Use our short form below to get a quote. 

Why do physicians need an own-occupation rider?

Just because you have an existing disability policy doesn’t mean you’ll have adequate coverage when you get ready to file a disability claim. After all, insurance companies are looking for a reason to deny your claim to ultimately save them money. So, this is where having an  own-occupation rider can make or break your disability claim.

Let’s say you’re a dentist who gets T-boned while driving to work. Your injuries are significant enough to prevent you from being able to do dental procedures, but not severe enough to keep you from working altogether. With your education and background, you could probably find another respectable job sitting at a desk and making $80,000 a year. In which case, your disability policy won’t pay out if you don’t have an own-occupation rider. 

You’re now stuck with a lower income, while still balancing your dental school debt and other financial obligations.

Now, let’s say you’re an interventional cardiologist with an own-occupation disability insurance policy. You injure your hand on vacation, preventing you from being able to perform cardiac catheterizations and other procedures needing precise dexterity. With your true own-occupation policy, you can collect disability income while working as a general non-invasive cardiologist as you recover from your injury.

As you can see, both medical and dental physicians can benefit from an own-occupation policy. But there are nuances to be aware of.

Policy options for own-occupation coverage

A true own-occupation policy will provide you with the strongest definition of disability. But there are some variations that could change your eligibility or benefit payout. Here are some examples of such policies:

• Transitional own-occupation disability. You might receive an adjusted monthly benefit based on how much you earn from any job you take while being disabled. For example, let’s say your disability coverage is $15,000 a month, and you earn $7,000 a month at a new job while you’re disabled. The insurance company could limit your benefit amount to $8,000 to make up the difference in income under this type of policy.
• Modified own-occupation disability. Under a modified own-occupation policy, there’s a difference between being able to work in another profession and actually working. Once you start working another job, the insurer will stop making disability benefit payments.

In some cases, your policy might transition to one of these variations after several years of paid full benefits. Additionally, each insurance company and policy will have its own definition of disability and benefit calculation.

FAQ: Own-occupation disability insurance

It’s important to work with a knowledgeable insurance broker who can explain your disability insurance benefits. Fill out the form below to receive a physician disability insurance quote from SLP Insurance.