When it comes to disability insurance, the distinction between “own occupation” and “any occupation” policies can have a significant impact on your financial security. Let’s learn the key differences between these two types of disability policies to help you know what to get.
1. Definitions
Own Occupation: Under an own occupation policy, you are considered disabled if you are unable to perform the essential duties of the specific job you held before your disability. This means you can still work in a different occupation and still receive benefits, as long as you cannot perform the duties of your previous job. There may also be other requirements, like falling under a certain pre-disability income threshold.
Any Occupation: In contrast, an any occupation policy defines disability as the inability to work in any occupation that you are reasonably qualified for, based on your education, training, and experience. This means that even if you can’t perform your previous job, you may not qualify for benefits if you’re able to work in a different occupation. This common definition is incorporated in most policies.
2. Eligibility Criteria
Own Occupation: Own occupation policies typically have a more lenient eligibility criteria, making it easier to qualify for benefits. As long as you can’t perform the essential duties of your previous job, you can receive benefits, even if you’re able to work in a different occupation.
Any Occupation: Any occupation policies have a stricter eligibility criteria, requiring you to be unable to work in any occupation that you’re reasonably qualified for. This can make it more challenging to qualify for benefits, as insurance companies may argue that you can still work in a different job, even if it’s not the same as your previous occupation. Often, they will look to the national economy, not your local economy, for theoretical jobs they think you could do.
3. Benefit Amounts
Own Occupation: Own occupation policies may provide a higher benefit amount, as they are designed to replace a larger portion of your previous income. This can be especially important if your disability prevents you from working in your chosen field, but you may still be able to work in a lower-paying job.
Any Occupation: Any occupation policies generally provide lower benefit amounts, as they are based on your ability to work in any job that you’re reasonably qualified for, rather than your previous occupation.
4. Duration
Own Occupation: Own occupation policies may provide benefits for a longer duration, often until the age of 65 or retirement. Some policies even have a lifetime benefit. This can be crucial for individuals with long-term or permanent disabilities, as it ensures they have financial support for the foreseeable future.
Any Occupation: Any occupation policies may have a shorter benefit duration, as they are based on the assumption that the policyholder can eventually find work in a different occupation. This can be a concern for those with severe or long-term disabilities.
5. Cost
Own Occupation: Own occupation policies typically have higher premiums compared to any occupation policies, as they provide more comprehensive coverage and are more expensive for insurers to underwrite.
Any Occupation: Any occupation policies generally have lower premiums, as they are less expensive for insurance companies to provide and have a more restrictive definition of disability.
When it comes to disability insurance, knowing the differences between own occupation and any occupation policies is crucial. Own occupation policies offer more comprehensive coverage and are generally better suited for individuals in specialized or high-income professions, while any occupation policies may be more suitable for those in more versatile or lower-income jobs.
At Raval Trial Law, our experienced disability insurance lawyers can help you navigate the complexities of these policies, the claims process, fight any wrongful denials, and ensure that you receive what you paid for. Contact us today to learn more.