The definition of disability is the most important part of a contract as this is what determines whether or not a claim will be paid.
Companies have different names for the same thing. As a physician, it is imperative to have a policy that covers you if you can’t work in your medical specialty. This can be called own occupation, your occupation, regular occupation, and specialty specific (different companies have different terms/names for the same thing).
Furthermore, you want to make sure that this definition carries on for the entire duration of the benefit period. A lot of association plans and some individual plans have own occupation for the first 2 years on claim and then require you to be totally disabled and not working or not gainfully employed thereafter. This is a HUGE difference, despite the fact that it is often not properly or openly disclosed.
The best kind of contract states that it will pay you if due to sickness or injury you cannot perform the duties of your occupation even if you are working in another occupation. This does not require language that says this includes your medical specialty since this is redundant. Your occupation is considered what you are doing at the time of claim. If at the time of claim you are a surgeon, that IS your occupation. If you are a trained surgeon but are working at the hospital as an executive, you are considered an executive at the time of claim even though you purchased your policy as an executive.
Let’s say for example you are an opthamologist. You work 50 hours a week practicing opthamology and earn $400,000 a year. 25 hours a week you are performing surgeries and 25 hours a week you are seeing patients and doing administrative work (non-surgical work). $300,000 of your income is derived from surgical procedures and $100,000 from the non-surgical work.
Using this example, let’s say you went on a bike ride and suffered a bad fall. As a result, you fractured your arm and shattered your hand into pieces. You need surgery to repair this but your physician says you will never be able to perform surgery again. You are devastated. After the shock and recovery from the surgery, you go back to work seeing patients and decide to teach and do research at the local university hospital. How would your disability insurance policy pay?
With an own occupation policy as stated above, you would receive your full monthly benefit regardless of how much income you earned seeing patients and as well as the income received with the other positions.
Here is why/how:
1) Due to sickness or injury, you were unable to perform the duties of your occupation. At the time of claim under this scenario, you had an injury to the hand as well as a 75% loss of income. This is because at the time of claim, 75% of your income was derived from performing surgeries.
2) Because it was an own occupation claim, there will be no limit on how much you can earn elsewhere. Let’s say your research takes off and now you are earning $500k a year. You would still be receiving full benefits.
3) Under the residual rider, you would need to have a 15 or 20% (depending on the policy) loss of earnings. After 75% or more loss of earnings, you would be receiving the full benefits. Under this scenario, full benefits would be paid.
4) If your income loss from the accident was 50%, you would receive 50% of your benefits.
Under the association policy or the other one mentioned that had a 2 year own occupation policy, you would only receive 2 year’s worth of benefits since you are gainfully employed elsewhere.
For more information about physician disability insurance, covering yourself in your subspecialty or to request a quote comparison, contact Set for Life Insurance today!