DISABILITY INSURANCE – DURING A DISABILITY #1

The first word that needs to be defined is disability. We all seem to know what death means, but legally dead seems to need a definition. If the victim lacks a heartbeat, brain activity, and is not breathing – chances are that, unless they are a politician, they are most likely dead. The only ambiguity about death arises when dealing with disappeared and presumed dead or cause of death. However, as long as there is a body, it seems fairly easy to agree on whether or not the body is dead or alive.

Disability is not quite that simple. How disabled must you be in order to qualify for disability?  Does the plan only pay for total disability or does it cover situations where your ability to work is reduced, but not completely eliminated?

In this issue, I will only discuss how disabled you must be in order to be considered totally disabled. In general, the definition is divided into three parts:

1.      Own Occupation

2.      Regular Occupation

3.      Any Occupation

1.      Own Occupation

Generally imposes two requirements

1 - You must be unable to do your own job and

2 - You must be under the care of a physician appropriate to the disability (more on that later).

There is no requirement that you not be working. As long as you cannot do whatever it was that you were doing prior to disability, you will be considered totally disabled. This definition actually permits you to economically profit from a disability. For that reason, it is generally available only to the most favourable occupation classes. Some carriers even limit it to specific occupations within those classes. Frankly, it is of most value to those professions with manual content, such as surgery or dentistry. I find it difficult to imagine a situation where someone whose occupation is primarily knowledge-based would be unable to do his or her job, yet still be able to do something else.

Further, the purpose of insurance is to protect against a loss. I find that Regular Occupation does an excellent job of that.

2.      Regular Occupation

In addition to the Own Occupation requirements, Regular Occupation sets a third: that you not be working elsewhere.

It is NOT an issue if you are ABLE to do that other job. That will have no effect on your total disability claim. The only question is whether or not you are actually performing that other job. If you are, then total disability benefits will stop. By the way, when group insurance policies use the expression Own Occupation, they almost always mean Regular Occupation. I have never seen a group plan that did not include the phrase Total Disability does not exist if you are engaged in any gainful occupation.

Those two definitions are quite straightforward and not that difficult to understand.

3.      Any Occupation

Any Occupation leaves much more room for interpretation. First, a lot depends on whether or not there are any additional words in the definition. For example, it might read any REASONABLE occupation; it may even include a method of determining reasonable, such as based on your education, training and experience; finally it may even include an income test.

The bottom line is that, unless you are in the late stages of MS or other such MAJOR illness, you will have a much more difficult time qualifying under the Any Occupation category. One point to consider here is that almost all group plans begin with some form of Regular Occupation (often two years) and then switch to Any Occupation. This means that your clients will have to meet a tougher definition in order to continue qualifying for benefits. Some individual products also take that approach but USUALLY offer to extend the Regular Occupation period to age 65 – an offer I ALWAYS recommend to my clients. This is the most important rider, if the policy is constructed this way. I would NEVER put a disabled client through the stress that this Any Occupation feature can create.

Last item: under the care of a physician appropriate to the disability. This may seem obvious. If I have a problem with my heart, I would not be seeing the doctor who gave me my last colonoscopy. As a guy, I would never see an obstetrician PROFESSIONALLY. If I have a health problem, I want to see a doctor who specializes in that area of medicine. The only time where this MAY be an issue is with stress or other mental or emotional disorders. We MAY want to see our family doctor for this, but the insurer will want the treatment at least overseen by a psychiatrist.

More next time on “non-total” disabilities.  

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