Disability Insurance: Long Term: Individual

A long term disability income policy pays benefits should you become totally disabled. This begs the question: how is "total disability" defined for purposes of these policies?

Generally, the following relate to a definition of "total disability" for purposes of long term disability insurance policies:

• You must be under the regular care of a licensed physician other than yourself.
• You must not be gainfully employed and must be unable to either perform your "own occupation" and/or "any suitable occupation." Most group policies use both definitions. For example, a policy may use "Own-occupation" definition during the first two years of disability, and apply the "any suitable occupation" standard after you have been disabled for two years.
• You are presumed to be disabled if you fit within the policy's definition of "Presumptive disability." For instance, you may be considered to be totally disabled if you lose use of two or more limbs or the total loss of sight.

Own-occupation

Under an "own-occupation" definition of disability, you are considered to be "totally disabled" if you are unable to perform the material (necessary) duties of your own occupation.

For example, if you are a surgeon, you injure your hand and can no longer perform surgery. You are "totally disabled" within the definition of this type of policy because you can no longer perform your own occupation, even though you could still continue to practice as a doctor.

If you are a switchboard operator and have polyps removed from your vocal cords, you are totally disabled because you can't speak on the telephone. Speaking on the telephone is clearly a material duty of your own occupation.

On the other hand, if you are a typist and occasionally cover the switchboard when the operator is at lunch or on breaks, you can still perform the "material" duties of your own occupation and would not be able to make a claim under this definition.

Any-suitable-occupation

Under an "any-suitable-occupation" definition of disability you are totally disabled if you are unable to perform the material duties of any occupation for which you are reasonably suited by education, training, or experience. As you can imagine, it is harder to be considered to be disabled under this definition than under an "own-occupation" definition of disability.

As noted immediately above, materiality and suitability go together. An example of being disabled so you can't perform your own-occupation is a surgeon with arthritis in her hands so that she can't perform surgery. On the other hand, if the definition is "any-suitable-occupation", she won't receive benefits because she is capable of teaching or consulting on surgery.

Both definitions

Even though there are policies available which apply an "own-occupation" definition for the life of the disability, many disability policies use both "own-occupation" and "any-suitable-occupation" definitions. The "Own-occupation" definition is generally applied during the first two years of disability, and the "any-suitable-occupation" definition starts after two years.

Applying this combination of definitions to the above example of the surgeon, she would only be eligible for benefits for the first two years of her disability. After that she would not be totally disabled because she could perform any-suitable-occupation: she could work as a doctor.

Presumptive disability

Most individual disability policies contain a provision that you will be presumed to be disabled if certain events occur, For example, a common provision is that you will be considered to be totally disabled if you lose use of two or more limbs or the total loss of sight.

Appeal

An insurance company's determination about disability can be appealed.

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