Own occupation or any occupation?
Standard plans have a relatively simple definition of what it means to be totally disabled: If you are unable to perform the substantial duties of your current occupation due to illness or injury, you generally qualify for coverage. Since short-term disability insurance benefits only last a few months, it is assumed that you will return to your usual occupation when you have recovered.
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However, long-term disability policies have to address another possibility: what if an injury or illness renders you unable to pursue your own occupation, but does not prevent you from engaging in any occupation? That’s why some long-term disability policies have an self-occupied definition of disability and others have an any occupation definition. depending on who you are and what you do, any type of policy can be beneficial. Certain types of disability, such as a permanent foot injury, may prevent you from doing parts of your job that require mobility. however, with a little training, you could do many types of desk jobs, even within the same organization, for a similar salary. If so, an insurance policy ltd with a definition of disability for any occupation may provide adequate protection.
however, people with very specialized skills (doctors, dentists, lawyers, even independent business owners) often need more comprehensive protection. To cite an obvious example, a surgeon who develops arthritis could lose the ability to perform surgery, severely affecting her earning potential, even though she is physically able to perform many other types of work.
Long-term disability insurance with a self-occupation definition of disability pays a benefit if you lose the ability to perform your usual occupation. Because these policies are more comprehensive, they also cost more than a policy for any occupation. therefore, insurance companies offer different forms of self-occupancy coverage to tailor benefits most cost-effectively to your needs. for example, tutor offers a number of variations on its own definition of occupational disability:
true own occupation
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If you are unable to work in your regular occupation but are willing and able to work in another capacity, this definition means that you can receive full payment of your benefits even while you have another type of job. If the surgeon in the above scenario had physician disability insurance with this definition, he or she could take a teaching or consulting job and still receive replacement income for the entire benefit period.
modified own occupation
This definition pays a full benefit if you are unable to work in your usual occupation and are not gainfully employed in another capacity. Consequently, the lawyer in the above scenario would receive benefits as long as he did not earn income, but if he decided to start working as a legal consultant, the benefits would cease.
real own occupation of two years
This definition of disability provides a two-year period of true self-employment. if you’re still disabled after two years, your coverage converts to a modified definition of self-occupation for the remainder of your benefit period.
modified own occupation of two years
Another option is to simply have a modified definition of your own occupation for the first two years. if you are still disabled after two years, your coverage becomes definition of any occupation, meaning that due to illness or injury, you cannot work in any occupation.
total and partial disabilities
“Own occupation” or “any occupation” disability is one of the most important factors to consider when obtaining a long-term policy. however, in certain situations, a person’s disability, and immediate need for benefits, is unquestionable. That’s why many disability policies have a presumptive disability feature that pays full benefits, without an elimination period, to an insured who loses sight in both eyes, hearing, speech or use of at least two extremities. Because the financial consequences of this type of disability can be especially severe, many long-term disability insurance policies also offer a catastrophic disability (cat) rider as an optional feature to increase the amount of disability benefits. For example, the Guardian’s Improved Cat provides up to 100% income replacement and adds a 3% compounded cost of living adjustment.
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Sometimes people can still work, but their disability has resulted in a partial loss of responsibilities, time at work, and income. That’s why many ltd policies offer a partial disability feature that pays a reduced percentage of benefits if you become disabled in a way that limits your ability to work but does not cause total disability. Some insurance companies (such as Guardian) also offer partial disability benefit riders to provide additional income protection, even if you are still working but only lose a percentage of your pre-disability earnings due to disability.
temporary and permanent disabilities
Some disabilities are total and permanent, but most are temporary. It may sound counterintuitive, but both short-term and long-term policies can provide protection for temporary and permanent disabilities. To explain why, let’s look at an example of each type of disability:
- using std and ltd for permanent disability: although std policies are not designed to provide years of replacement income, they do have a much shorter waiting period than most for ltd plans, as little as two weeks, compared to six months or more for many long-term disability plans. If you are permanently disabled, your standard plan can provide you with the income you need to live on from the time you become disabled until long-term disability insurance benefits begin. Having standard benefits can also help you lower the cost of long-term coverage, because the longer your ltd waiting period, the lower your premiums.
- using std and ltd to a temporary disability – some temporary disabilities improve in a matter of weeks or months, while others may take a year or two to recover. While long-term disability insurance typically won’t pay benefits for the first six months, it can and will work in conjunction with short-term disability insurance to help you maintain your lifestyle if an accident or serious medical problem ( like a stroke) continues. you out of work for a year or more. These insurance policies may also cover rehabilitation expenses as you recover, including the costs of therapy and care, as well as modifications to your home, car, or workplace to help you get back on your feet. work again. Some insurance companies may also provide coverage for training, for example paying you to go back to school or obtain certifications that will make you a more competitive job candidate.
Some disability insurance policies will have exclusions for certain mental illnesses, and if an applicant is being treated for a condition such as depression or anxiety prior to purchasing the policy, it will generally be treated as a pre-existing condition that is not eligible for coverage. coverage. other policies may cover mental illness, but with reduced benefits or a shorter benefit period. each disability provider sets their own rules, so it’s important to find out what they are before you buy a policy.
While a healthy pregnancy is not the same as a disabling illness or injury, many short-term disability policies now offer maternal benefits. If so, you may qualify to receive 50-100% of your earnings, usually for six weeks after giving birth, or eight weeks if you have a C-section. a complicated pregnancy is another matter, because (depending on the problem) a complication may be more like an illness that would be covered by a standard plan, and the benefit period may well be longer. If a pregnancy complication causes lasting disability, or worsens another condition, such as diabetes or multiple sclerosis that was previously under control, you may qualify for long-term disability insurance benefits after the pregnancy period ends. wait.
other disability coverage benefits
Long-term disability policies are highly customizable, with major companies like Guardian offering numerous riders to enhance benefits and increase protection. popular riders include:
- Student Loan Protection – Provides extra money to make student loan payments. it is especially useful for early career professionals, such as doctors and lawyers, who have invested heavily in their education. 3
- Cost of Living Adjustment (Cola) 4 – This states that the insurance company will increase your benefits while claiming the account for inflation.
- retirement contribution protection5 – protects retirement savings by replacing contributions you would have made to your defined contribution plan while you were fully disabled. Guardian Retirement Protection Plus Rider also compensates you for matching contributions that would have come from your employer.