Disability Insurance Broker Defines Disability Insurance
As a knowledgeable Disability Insurance Broker, I often get questions from physicians and dentists regarding disability insurance. One of the most important features that one would look at when determining the disability plan that suits their needs is, how does the insurance company actually define disability? When would you be able to collect? This is extremely difficult to decipher, as many companies and different types of plans will use the same terminology.
The most comprehensive plan is what they refer to as own occupation. In the business, brokers and agents refer to this as specialty definition of disability. This is the only one that will pay you fully if you can’t do your medical, professional, or business that you were doing prior to the claim. If you can’t do that then you are going to obtain full disability benefits, regardless of any other income that you earn.
There is also something called modified own occupation. In this case, if a person can’t do the important duties of their own occupation and they are not required to work, then they will receive full benefits, but at their choice they could go back to work. If they choose to go back to work then they are going to be paid partially, it’s going to be based on their loss. If they have more than a 75% loss, then they may still be paid fully but there is the potential of reduction under this own occupation definition.
What you want to look for is in the definition, after it determines the important major duties of your own occupation specialty; you want to see if there’s the word and, and not working. If you see that in the definition, you have a modified own occupation not a specialty definition. In that definition, they say, and you’re not working elsewhere. If you are working elsewhere then you have to look at the residual or partial payments that are available.
The next definition of disability is the any occupation definition. In this case, if you can’t do your medical specialty, or your own profession, then you will receive full benefits. However, now the insurance company has the right to decide if could you do any occupation in the national economy based on education, training, or experience. In this case, now the insurance company is able to decide should you be working. An example would be for most physicians, if they would be able to teach under most circumstances, so they may not be able to obtain benefits under that type of plan.
The last one is a transitional own occupation definition. This one is an own occupation specialty definition. However, if the amount of money that you earn after a disability, added to the amount of disability benefits, and this is higher than your pre-disability earnings they could then reduce your disability benefit. I’ve never seen anyone actually have their benefits reduced under this type of plan, and it is, in fact, guaranteeing 100% of the income that you earned before. Most insurance companies will put an inflation to your pre-disability earnings so that if you were earning $100,000 the following year you would have been expected to earn $107,000 using a 7% compound, so you will be able to earn more in the future using those cost-of-living increases that are available.
If you are a physician or dentist and have any questions about the definitions of disability insurance, contact our professional Disability Insurance Brokers for guidance. Let our experience work for you.
This educational blog was brought to you by Dedicated Disability Insurance Broker Michael J. Bruno, seasoned Chartered Financial Consultant, Chartered Life Underwriter and Registered Health Underwriter. Specializing in financial planning and disability insurance for physicians and dentists for over 30 years.