When you buy Disability Income insurance, make certain that you determine what definition of “disability” is being used by your policy.
Some policies use an, “ANY OCCUPATION” definition of disability. These policies only pay a benefit if you are disabled, so badly, that you are unable to perform the duties of any job.
These plans, in theory, are going to be less expensive. They are a good option for unskilled, manual laborers.
Security Disability Income insurance uses a modified form of this type of definition. If you are relying on SSDI for your Disability Income insurance, be advised that if you are able to perform the duties of another job, your disability claim may be denied by Social Security.
If you have invested significantly in your skills, you will be better protected with a Disability Income insurance policy that has an, “OWN OCCUPATION” definition.
In theory, these types of policies are more expensive, but they are worth the extra premium. They will pay benefits if you are unable to perform the duties of the occupation for which you trained.
For example, assume that you have invested thousands of dollars, and a full decade in training to be a surgeon. If a freak accident requires your arm to be amputated, at the elbow, you will no longer be able to perform surgery. In this case, even though you would still be able to work as a telemarketer, a policy with an “OWN OCCUPATION” definition would pay full benefits for the entire policy benefit period.
Most of the policies, which with I work, use both definitions. The “OWN OCCUPATION” definition is used for the first two years. It will pay a benefit if you are unable to perform ALL of the duties of the job you had when you became disabled.
However, after you have gotten Disability Income benefits for a full two years, the definition changes to an “ANY OCCUPATION” definition. Benefits would continue to be paid but only if you are disabled, seriously enough, that you are unable to be trained to do any other job.
The idea behind these HYBRID POLICIES is that an individual will be less likely to remain disabled. He, or she, will be motivated to retrain so that they can get back into the work-force, and be an asset to the community.