The absolutemost important part of any disability insurance policy is the actual definition of disability. The definition determines what the requirements are to collect your benefits. When the definition does not have favorable terms, you may find that what you consider disabled and what the insurance company consider disabled are two different opinions.
A true own-occupation definition (also known as “own-occ”) is the most favorable one available. For Guardian, this definition says that you are considered totally disabled if, solely due to injury or sickness, you are not able to perform the material and substantial duties of your occupation, even if you are at work in another occupation.
Guardian also has a specialty definition for medical or dental specialists that have limited their occupation to a single specialty. That specialty is considered to be their occupation, even if they can work in another medical occupation. Let’s use an example:
John is a heart surgeon that earns $350,000 per year and the insurance company has agreed that heart surgery is his specialty. He develops a disease and is no longer able to perform heart surgery due being unable to keep his hands steady. The insurance company may determine that John is unable to perform the material duties of his specialty and pay a full disability benefit, but John may still be able to teach cardiology at a medical school to earn a separate additional income. With a true own-occupation definition, his earnings from teaching would not offset the disability payments he receives.
When reviewing contract terms for disability definitions, always keep in mind that the longer the wording of the contract, the less favorable the terms are. A good definition should be short and very clear – any additional statements, such as “and not able to work in any other occupation” are to your detriment and may allow the insurer to not pay a benefit. With life insurance, you are either dead or not dead for the company to pay a claim – with disability insurance, you truly get what you pay for.
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