The definitions in your disability insurance policy may one day be used to determine whether or not you are disabled. Being sick or hurt and unable to work and do your job is only one part of that determination. The other part is the insurance company, your policy, and the definitions in your policy.
Guess which part carries the most weight? Of course it’s the insurance company, or more specifically, the definitions and provisions in your policy, that will ultimately determine whether or not you will be deemed eligible to receive disability benefits.
As a physician or dentist, it’s critical to have a policy with the most liberal definitions and provisions. Liberal, as opposed to restrictive, definitions and provisions, are generally worded in such a way as to make it easier for the policyholder to qualify for benefits and harder for the insurance company to deny benefits.
Let’s take a look at two important examples of liberal vs. restrictive definitions found in disability policies:
1. Definition of Total Disability:
Liberal – Due to your injury or sickness, you are unable to perform the material and substantial duties of your occupation.
Restrictive – Due to your injury or sickness, you are unable to perform the material and substantial duties of your occupation and you are not engaged in any other gainful occupation.
More Restrictive – Due to your injury or sickness, you are unable to perform the material and substantial duties of your regular occupation. After benefits have been payable for 24 months, you are considered disabled if, due to your injury or sickness, you are unable to perform the material duties of any reasonable occupation for which you are qualified by education, training or experience.
Notice how the liberal definition is clean and concise. That is typically the case with liberal definitions in a disability policy. The shorter, the better.
The restrictive and more restrictive examples above include additional requirements (“you are not engaged in any other occupation” and “you are unable to perform the material duties of any reasonable occupation”) that make it harder to qualify for disability benefits. More words generally means more restrictive.
2. Definition of Your Occupation:
Liberal – The occupation or occupations which you are regularly engaged in at the time your disability begins.
Restrictive – The occupation you routinely perform at the time your disability begins. In evaluating your disability, the insurance company will consider the duties of your occupation as it is normally performed in the general labor market in the national economy. It is not work tasks that are performed for a specific employer or at a specific location.
Once again, shorter is better. The liberal definition is brief and to the point. Most of the leading carriers of disability insurance for physicians and dentists use a definition of Your Occupation similar to the liberal example above. In the event of disability, the leading carriers look to whether or not you can perform the duties of your occupation or specialty as you were performing them before becoming disabled.
The restrictive definition, which is commonly found in Group LTD policies, makes it harder for you to qualify for benefits. Insurance carriers that use this definition of Your Occupation are not concerned with how you were performing the duties of your occupation or specialty just before you became disabled. They are only concerned about whether or not you can perform your occupation as it is “normally performed in the general labor market in the national economy”. This is a much bigger hoop to jump through and could make it harder for you to qualify for benefits.
Exceptions to the Rule
While the general rule of “Shorter is Better” usually applies with disability policy definitions, there are some exceptions. Occasionally, an insurance company will add favorable language to their definitions. For example, some of the leading carriers for physicians and dentists have added the following type of language to their definitions of Your Occupation:
- If you have limited your practice to a professionally recognized specialty in medicine or dentistry, then that specialty will be deemed Your Occupation.
In this example, it is clear that the insurance company has expanded their definition to make it more liberal or favorable to the policyholder, not more restrictive. Still, the general rule with policy definitions is: more words, more restrictive.
Definitions are Important
The definition of Total Disability and Your Occupation are two important definitions found in a disability insurance policy, but there are many more. These definitions will determine whether or not you will qualify for benefits in the event of disability.
Don’t get stuck with a policy full of restrictive definitions. Make it easier for yourself to qualify for benefits. Make sure your policy’s definitions are more liberal than restrictive. If you need help, don’t go it alone. Seek help from an experienced, knowledgeable professional who specializes in disability insurance for physicians and dentists.