“Own Occupation” Disability Insurance Policies: A Guide for Doctors

You have probably heard that doctors and other medical professionals should invest in “own occupation” disability insurance. However, many physicians do not realize that insurers sometimes include loopholes and unfavorable terms in their private disability insurance policies—which are sometimes discovered only after you file for short-term or long-term disability.

In this blog, our disability insurance lawyers outline three things you should look out for in your policy. We will also suggest ways to improve your chances of getting the benefits you deserve.

What Is an “Own Occupation” Disability Policy?

Most private insurance policies include one of the following definitions of disability:

  • Own occupation: you are eligible for benefits if you cannot perform the duties of your specific job due to an illness, injury, or chronic medical condition.
  • Any occupation: you must prove that you cannot perform any type of work because of your health conditions.

While “own occupation” policies are typically more expensive than those with “any occupation” clauses, they are often worth the investment.

Suppose you are a cardiothoracic surgeon practicing in Chicago. You earn $550,000 per year. You develop an essential tremor that prevents you from operating on patients, making it impossible for you to do your job.

If you have an “own occupation” definition of disability, you might qualify for disability insurance benefits. However, with an “any occupation” policy, the insurance company will likely deny your claim, arguing that you can still do other work, since many other jobs do not require the manual dexterity and fine motor skills of a surgeon.

However, even if it seems like you have a more advantageous “own occupation” plan, you should carefully review the terms and conditions of your policy. Here are a couple of issues you should look out for.

3 Loopholes That Insurance Companies Sneak Into “Own Occupation” Disability Insurance Policies (and How to Avoid Them)

Your disability insurance policy’s terms and conditions will affect your eligibility, the amount of your monthly benefit payments, and the procedures that you will need to follow during your claim.

However, many disability insurance policies contain hard-to-read boilerplate and technical terms that can make even the most sophisticated physician’s head spin. If you need help interpreting your policy (or selecting a plan that protects your long-term interests), contact the disability insurance lawyers at Bryant Legal Group.

Here are three common loopholes that you should look out for—and ways you can strengthen your coverage.

1. Modified “Own Occupation” Language

There are several ways that insurance companies turn what seems to be “own occupation” policies into more restrictive plans. Suppose your policy says you are disabled if you “cannot perform every material function of your own occupation.” This might look, at first glance, like an “own occupation” policy. However, that “every material function” language is problematic—and essentially makes this policy an “any occupation” plan.

Let’s return to our cardiothoracic surgeon with an essential tremor. While they cannot perform surgery or other activities involving fine motor skills, they can still perform post-operative clinical examinations, review diagnostic testing, and provide treatment recommendations. In this case, they might be able to do some of the material functions of their job—even though the essential one, surgery, is no longer possible.

Consider Purchasing a Specialty-Specific Disability Insurance Policy

While an “own occupation” policy is a good option, you are even better off if you have a “specialty-specific” or “own specialty” policy. These disability insurance plans should pay a monthly benefit as long as you cannot perform your actual medical specialty—even if you can work as a physician in another capacity.

2. Limiting Your Long-Term Disability Benefits

Another tactic involves restricting residual benefits. You might have a residual benefit rider included in your long-term disability policy, which will pay a proportionate monthly benefit, based on your past earnings and current income.

For example, suppose you are a disabled oncologist who used to earn $450,000 annually, but now work as a teaching physician and make $180,000. If you have a residual benefit rider, the insurance company might make up some of the difference between your previous and current earnings.

However, many residual benefit riders require that you are totally disabled for a period before you return to work. What if you have a progressive disease that limits your ability to perform your own occupation, but never totally disables you? In this situation, you might be ineligible for residual benefits under the rider.

Consider Purchasing a True Own-Occupation Insurance Policy

Many doctors and medical professionals opt for a “true own-occupation” policy, which covers your disability if you can no longer perform your occupation—even if you can do other income-generating work.

With a true own-occupation policy, you might receive your full long-term disability benefit every month—although your disability insurance lawyer should still carefully examine the policy for loopholes and exclusions.

You might also want to include a cost-of-living adjustment rider (COLA) in your policy. This will increase your benefit payments to reflect inflation or the cost of living.

3. Policies That Transition to “Any Occupation” Plans

Many long-term disability policies start out as own occupation policies. However, insurance companies sometimes bury an important limitation in the fine print—they often convert to an “any occupation” after two years.

If you have one of these disability insurance policies, the insurance company might terminate your LTD benefits if you are capable of other work (even simple, sedentary jobs that pay much less than your current medical work).

Consider Working With an Experienced Disability Insurance Attorney

If you are stuck with an LTD policy that transitions to an “any occupation” definition of disability, you need to take a proactive approach. You still might qualify for monthly benefits, depending on the severity of your limitations and medical conditions. However, you will need compelling evidence and and well-built legal arguments.

An experienced disability insurance lawyer can help you build your case, documenting all your disabling conditions and carefully interpreting your policy’s language.

RELATED: Dentists and Long-Term Disability

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The content provided here is for informational purposes only and should not be construed as legal advice on any subject.

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