What's in this guide?
What is own occupation disability insurance?
Own occupation disability is a type of disability insurance policy that pays out a monthly benefit equal to a percentage of your income if you suffer a disability and can’t work your specific job.
The key part of an own occupation policy is that you can still receive your monthly disability benefit after returning to work — as long as you’re unable to work the same job that you had before you went out on disability.
Own occupation vs. any occupation
Own vs any occupation refers to the type of work that disqualifies you from receiving disability benefits.
- Own occupation. You won’t qualify for disability payments if you’re able to return to work in the exact same occupation or capacity as you had before your disability. This means you can receive disability payments and return to work in other capacities, even if it’s in the same industry — a broader, and more favorable return-to-work guideline.
- Any occupation. You’ll be ineligible to receive your disability payments if you can return to work in any capacity or occupation — a much stricter return-to-work guideline.
What are the different types of own occupation disability insurance?
While own occupation disability policies offer broad coverage, there are subtypes that further breakdown how you’ll be paid once you return to work.
True own occupation disability insurance
A true own occupation disability policy is the most comprehensive type of own occupation policy. As long as you’re suffering a physical or mental disability and can’t perform your regular job, this policy will pay you a monthly benefit.
You’ll still be eligible for 100% of your monthly benefit if you take another type of job, regardless of how much it pays. But, be sure to clarify with your insurer how it defines occupation, and whether it considers your whole professional specialty your occupation, such as medicine, education or law.
True own occupation disability has the most relaxed guidelines for disability policies, which also makes it the most expensive. This type of policy is best for high-earners who are highly specialized and can afford the steep premiums, such as doctors, lawyers, or executives.
Transitional own occupation disability insurance
A transitional own occupation disability policy is similar to a true own occupation policy, but won’t pay out the full benefit once you return to work. Instead, your monthly benefit is reduced by the amount that your new job pays you. You’ll still be able to receive 100% of your pre-disability income, but not more than that.
This type of policy might be a good option for professionals who want to ensure they get all of their pre-disability income, but can’t afford to buy a pricier true own occupation disability policy.
Not engaged own occupation disability insurance
Also known as a modified own occupation policy, this type of policy has the most restrictive own occupation definition. It will stop paying your disability benefit if you start work in any type of job.
The difference between this policy and an any occupation policy is that a not engaged policy stops paying when you actually begin working. Any occupation policies stop paying when you’re physically able to begin working, regardless of whether you actually return to work or not.
A policy like this is more affordable than a true or transitional own occupation policy and could be a good fit for teachers or dental assistants who likely won’t find immediate employment in their same industry while on disability.
Adjustable hybrid policies
This policy is a combination of an own occupation and an any occupation policy. It starts out as an own occupation policy that pays out the benefit even if you return to work. However, the own occupation period is limited to a specified amount of time, after which, the policy becomes an any occupation policy, where being able to return to any job disqualifies you from receiving disability benefits.
For example, the policy may be considered an own occupation policy for two years. If you return to work within those two years, you’ll receive your disability benefit. After two years, your policy is considered an any occupation policy, and being able to work disqualifies you from receiving disability payments.
How do I know which sub-type of own occupation policy I have?
Read your policy for clues, since which type of own occupation plan won’t be spelled out. How your policy defines disability and the terms of your disability benefit will tell you which type of policy you have. Each type of policy will have language similar to our descriptions, but call your insurance company to double check.
How do I pick the best policy for me?
|Type of policy||Best for||What is it|
|Own occupation||High income earners||Receive benefits even if you return to work in the same industry, just not in your old capacity.|
|Any occupation||Factory workers, truck drivers||Benefits stop once you’re able to work in any type of job.|
|True own occupational||Doctors, veterinarians, pilots||Same as own occupation; receive benefits even if you return to work in the same industry, just not in your old capacity.|
|Transitional own occupation||Accountants, office workers||You can return to work in the same industry, but your benefit amount is reduced by your new income.|
|Not engaged own occupation||Teachers, dental assistants||Benefits stop once you actually start working in any type of job.|
|Hybrid policy||Younger professionals||Starts out as a true own occupation policy and transitions into an any occupation policy after a specified period of time.|
Compare disability insurance companies
Own occupation disability insurance provides more comprehensive coverage than any occupation disability. It allows you to return to work and make money while still paying you a monthly disability benefit — as long as you’re not working in the job you had when you suffered a disability.
Read about and compare different disability insurance companies to see which one is the best fit for you and your budget.
Common questions about own occupation disability insurance
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