Disability insurance policy definitions impact available benefits

Long-term disability insurance policies often vary in how they define disability. The distinction is between whether an individual can still work in his or her own occupation versus any occupation following an injury or illness. A policy definition can affect available benefits.

If a surgeon loses the necessary use of his hands due to Parkinson's disease he cannot continue in his own profession, but he may still be able to work in a hospital administration role. Depending on the type of long-term disability policy, the insurance company may deny benefits.

Own occupation policy

Own occupation coverage generally defines disability as the inability to perform the duties of an individual's own occupation. For the surgeon, if he could no longer perform he should qualify for disability benefits. Own occupation coverage provides the most liberal benefits.

Any occupation coverage

Conversely, any occupation policies limit benefits by defining disability as the inability to perform the duties of any occupation. When determining whether benefits are available, earnings level, education and experience are often considered.

The surgeon from the initial example may not receive benefits under these policies, especially if he can still complete the administrative role, which requires a medical background and some familiarity with hospital procedures. In some cases, an insurance company may deny disability benefits to a professional because he or she could work in retail or customer service.

Split coverage: a combination of the two types of coverage

Many employer-provided disability plans provide ERISA long-term disability coverage. The policy is a hybrid and starts with own occupation coverage for a certain period and then changes to any occupation. The initial time is often 24 months. In a split policy, it is beneficial to seek the counsel of an attorney to discuss whether you will remain disabled.

Some professionals seek out different positions when they feel they can no longer complete the duties of a current profession because of an illness or injury instead of filing for long-term disability. But if the disease causes further deterioration, benefits will be limited by the current position.

When an illness or injury interferes with your ability to perform your job, speak with a disability insurance attorney. In the case of a workplace injury, there could also be benefits available through workers' compensation. The timing of a disability claim can be important and impact future earnings when you are unable to continue in your chosen field.