Disability Insurance – Occupation Definitions

Most clients understand the need for life insurance, but not so many feel that they have a need for health or disability insurance products. While some, including myself, may argue that life insurance is of paramount importance, since death is a certainty, the fact is that disability and health insurance products are truly just as important. If you become disabled due to illness or injury, your income likely stops, but your bills most certainly don’t.

According to the Canadian Life and Health Insurance Association 1 out of 3 people, on average, will become disabled for 90 days or more at least once before age 65. That’s a lot of people who can’t work but still have to pay bills.

While there is a seemingly endless amount of information that can be discussed in this post on the topic of disability insurance, let us focus on the most common question that clients come across when looking to put a policy in place. What is the actual definition of a disability?

While there are group disability policies offered by some employers, we will focus on the definition of disability as it pertains to an individually owned disability contract. Generally speaking, there are 3 variations to the way a disability can be defined. The 3 variations are, own occupation, regular occupation and any occupation.

A disability policy with an own occupation definition is the costliest and highest level of disability coverage available. In order to qualify for an own occupation policy, the individual would likely be a highly skilled professional. Within the definition of own occupation, the individual only has to be unable to perform the duties of their specific occupation in order to receive disability payments. Imagine a neurosurgeon who gets injured or ill and now cannot perform surgeries required in their chosen occupation. The insured can still perform the duties required in some other occupation, but would still receive disability payments because they can not work in their chosen occupation.

A regular occupation definition is a less costly definition of disability. Within the regular occupation definition, an insured who cannot work in the occupation that they were engaged in at the onset of their disability due to illness or injury would qualify to receive disability benefits.

The least costly, and by some accounts, the least attractive definition of disability is the any occupation definition. The any occupation definition requires that an insured be unable to adequately perform any job for which they are reasonably qualified based on their training and experience. This means that the individual is so disabled to an extent that they basically cannot perform at even the most basic occupations, and therefore cannot provide financially for themselves or dependents.

Talking about disability insurance may not be fun, but it is an important discussion to have with your advisor or benefits department. Most people have no idea how much or what coverage they have in place. For most of us, our most valuable asset is our income and a well planned disability policy will protect an insured from the loss of this valuable asset.

To get a more detailed understanding of your group or individual disability insurance needs, contact me directly and I will guide you through the process of choosing the right product for your unique needs.