How would you feel if you became totally disabled today and your disability policy contained the following definition of disability?

“Disabled means that, solely because of a covered injury or sickness, you are unable to perform the material duties of your regular occupation and you are unable to earn 80% or more of your indexed earnings from working in your regular occupation. After benefits have been payable for 24 months, you are considered disabled if solely due to your injury or sickness, you are unable to perform the material duties of any occupation for which you are (or may reasonably become) qualified by education, training or experience, and you are unable to earn 80% or more of your indexed earnings. We will require proof of earnings and continued disability.”

The definition of disability above is found in an actual Group LTD policy that is currently being offered by a hospital to its employees, including physicians.  If the employees elect to participate in the policy, they must pay for it out of their paycheck, through payroll deduction.

I’ve spoken with several physicians who work at this hospital and my advice to every one of them has been to decline this policy and apply for a high-quality, individual disability insurance policy. Each of them has taken my advice and why wouldn’t they?  They’re like most physicians who want a disability policy that is going to work for them, not find ways to take away their benefits after 24 months of a claim.

The definition of disability is not the only problem with this Group LTD policy.  LTD policies by their very nature have numerous limitations.  However, the topic today is this particular definition of disability and the problems it creates.

Let’s review this definition of disability and break down it’s two primary weaknesses, which are found in the following sentence:

  • After benefits have been payable for 24 months, you are considered disabled if solely due to your injury or sickness, you are unable to perform the material duties of any occupation for which you are (or may reasonably become) qualified by education, training or experience.

Problem 1:  Any Occupation 

Imagine if you were a physician or dentist covered by this type of policy and you became disabled and could not perform the duties of your occupation or specialty.  The definition above might work well for the first two years of your disability, but what happens after benefits have been payable for 24 months?  The insurance company is allowed to re-evaluate your claim to determine if you are able to perform the material duties of any occupation for which you are qualified by education, training, or experience.

That would be very unsettling and a situation no physician I have ever worked with would want to experience.  You’ve invested so much time, effort, and money into becoming a physician or dentist and maybe a specialist.  Then you become disabled, unable to perform the duties of your occupation and the insurance company can stop paying benefits after 24 months because you are able to perform the materials duties of any occupation for which you are qualified by education, training, or experience.

Let’s see, as a physician or dentist, you’re highly educated, well trained, and have invaluable experience.  I can imagine dozens of occupations you would be qualified for.  But you didn’t put in all the time and work to achieve what you’ve achieved only to be told by an insurance company, while disabled from working in your occupation or specialty, that you must go to work in another occupation in order to survive financially .  But that’s exactly what could happen with this definition of total disability.

Problem 2:  (Or May Reasonably Become)

Just when you thought it couldn’t get any worse.  The policy does not settle with simply changing the rules after benefits have been payable for 24 months. It goes on to state that the insurance can stop paying benefits after 24 months if you may reasonably become qualified to perform the duties of any reasonable occupation.

So even if you’re not presently or entirely qualified to perform the material duties of another reasonable occupation at that time, but you could reasonably become qualified, the insurance could stop paying benefits.  What does it mean that you could reasonably become qualified?  I’m not sure, but I don’t like the sound of it and I don’t know many physicians or dentists who would be.

Get Own Occupation Coverage

You purchase a disability insurance policy to protect your income in the event of disability.  As a physician or dentist, you also want your policy to protect your occupation or specialty during a disability, and the definition of disability described above does not adequately protect your income or your occupation after 24 months of benefits have been paid.

5715915_s - CopyYou can avoid both problems above by getting a high-quality, individual disability policy with Own Occupation coverage.  Own Occupation coverage states that:

  • You will be considered totally disabled if, due to injury or sickness, you are unable to perform the material and substantial duties of your occupation.  

Own Occupation coverage will not allow the insurance company to re-evaluate your claim after 24 months to see if you are able to perform the duties of another reasonable occupation.  As long as you can’t perform the material and substantial duties of your occupation, you will continue to be considered totally disabled.

That’s as good as it gets.

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