Why Is the Real Own Occupation Definition of Disability so Important?
If you have spent any time looking at disability insurance, you have probably heard the term “Own Occupation.”
It sounds pretty straightforward.
If you become disabled and can no longer perform your occupation, the insurance company pays you benefits.
Unfortunately, it is not quite that simple.
The problem is that there are several different definitions of disability that get described as “own occupation,” and while the differences may not seem significant when you are healthy and buying a policy, they can become very significant when you are actually filing a claim.
Let me give you an example.
Assume you are an orthopedic surgeon earning $600,000 per year and you develop a medical condition that prevents you from operating.
You can no longer perform surgery.
Are you disabled?
Most people would say yes.
But now let’s change the question.
You can no longer operate, but you are perfectly capable of teaching at a medical school, consulting for a medical device company, doing administrative work or perhaps even working as a physician in a non-surgical capacity.
Now are you disabled?
That answer depends entirely on the definition in your disability insurance contract.
And this is where “own occupation” starts getting confusing.
The Definition I Prefer: Own Specialty
For physicians, the definition I prefer is Own Specialty.
There is an important distinction between protecting your occupation and protecting your medical specialty.
Using our orthopedic surgeon, if you cannot perform the material and substantial duties of your specialty, you can potentially qualify as totally disabled even though you may be perfectly capable of doing something else.
Let’s assume your individual disability policy pays $20,000 per month.
You develop a condition that prevents you from performing surgery and qualify as totally disabled under the Own Specialty definition.
A year later, you decide you are tired of sitting at home.
You teach.
You consult.
You work for a medical device company.
Maybe you start an entirely different business.
With the Own Specialty definition I prefer, you could potentially earn income doing something else and continue receiving your $20,000 monthly disability benefit.
That’s important.
The policy isn’t saying you are incapable of doing anything.
It is saying you are disabled because you can no longer perform the duties of the medical specialty you were practicing when you became disabled.
Those are two very different things.
But Not Every “Own Occupation” Definition Works That Way
Now let’s take the same orthopedic surgeon and change the contract.
The policy says you are totally disabled if you cannot perform the duties of your occupation and you are not working in another occupation.
Those few extra words can make a big difference.
If you can’t operate and aren’t working, you may receive your full benefit.
But what happens when you decide to teach?
Consult?
Work for a medical device company?
Now the answer may change because you are working in another occupation.
There are also definitions where you may be able to work elsewhere, but the amount you earn can affect what the insurance company pays you.
You will hear terms such as True Own Occupation, Modified Own Occupation, Transitional Own Occupation and other variations depending upon the insurance company and contract.
They all sound similar.
They aren’t.
That’s why I am much more interested in reading the actual definition than I am in what somebody calls it.
And Then There Is Your Employer Coverage
This is probably where I see the most misunderstanding.
A physician will tell me:
“I’m good. I have own occupation disability coverage through my employer.”
Maybe.
But I immediately have a couple of questions.
What does your employer contract consider your occupation?
And:
How long does that definition last?
This is particularly important for physicians because Own Occupation is not the same thing as Own Specialty.
If you are an orthopedic surgeon, anesthesiologist, emergency medicine physician or another specialist, an individual policy with an Own Specialty definition may specifically protect your ability to perform the duties of that medical specialty.
Your employer contract may not.
The employer contract may look at your occupation much more broadly as being a physician, rather than specifically an orthopedic surgeon or anesthesiologist.
That distinction can matter a lot.
Go back to our orthopedic surgeon.
You can no longer operate.
Your surgical career may be over.
But you still have your medical license and are capable of working as a physician in another capacity.
Under an Own Specialty definition, the question may be:
Can you still perform the duties of an orthopedic surgeon?
Under an employer Own Occupation definition, the question may be much broader:
Can you still work as a physician?
Those are very different questions and potentially very different claim outcomes.
And What Happens When the Definition Changes?
There is another issue with many employer long-term disability contracts.
The definition you have at the beginning of a claim may not be the definition you have forever.
An employer plan may provide an Own Occupation definition for a limited period of time and then change to an Any Occupation definition.
Now the question can become whether you are capable of performing another occupation based upon your education, training and experience.
So you could still be completely incapable of returning to the medical specialty that generated your income before the disability, yet the insurance company may determine you are capable of doing something else.
This is why I don’t get overly excited when someone tells me:
“My employer gives me $15,000 per month of disability insurance.”
Great.
I’m glad you have it.
But I want to know more.
Is the $15,000 taxable?
Are there offsets?
What definition gets you the benefit?
Does the contract protect your specialty or simply your occupation as a physician?
Does that definition change?
And most importantly:
What has to happen for them to continue paying you?
The benefit printed on the statement tells me what you could receive.
The contract tells me when you actually receive it and how long you get to keep it.
So What Definition Do You Actually Have?
If you already own disability insurance, pull out your policy.
If you have employer coverage, get the actual long-term disability certificate or contract.
Don’t rely on the benefit summary.
Don’t rely on the quote.
And don’t stop when you see the words Own Occupation.
Find the definition of Total Disability and read what comes after it.
Then ask yourself a simple question:
If I can no longer perform my medical specialty, but I am healthy enough to do something else, what happens to my disability benefit?
Can I teach?
Can I consult?
Can I work in another medical capacity?
Can I start a business?
Can I earn $100,000? $300,000? $500,000?
And what happens to my disability benefit if I do?
Those are the questions that tell you what you actually own.
From Scott & Amber’s Desk
There isn’t necessarily one disability insurance policy that is right for everyone, and there are plenty of situations where cost and other considerations have to be part of the decision.
But there is one thing I would want every physician to understand:
“Own Occupation” isn’t a definition.
It’s the beginning of a conversation.
So the next time someone tells you a disability policy has an Own Occupation definition, my response would be pretty simple:
Great. Which one?
Every article in the MD Disability Quotes Knowledge Center is written with one purpose: to help physicians understand insurance contracts before they ever need to rely on them.
About MD Disability Quotes
MD Disability Quotes is a nationwide disability insurance advisory firm specializing in income protection for physicians, dentists, business owners, and other high-income professionals.
Founded by Scott Nelson-Archer and Amber Stitt, the firm brings nearly 40 years of combined experience helping clients evaluate disability insurance contracts, navigate underwriting, and design income protection strategies tailored to specialized careers.
Scott and Amber are the longest-tenured disability insurance experts featured by White Coat Investor. Their education-first approach has helped thousands of physicians better understand disability insurance throughout medical school, residency, fellowship, and practice.
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