Disability insurance replaces a portion of your income in the event you are unable to work for an extended period of time due to a covered illness or injury. Most disability insurance policyholders will know their monthly benefit if disabled, or how long they have to wait before collecting a disability benefit, but few policyholders understand the parameters used by the insurance company to determine if someone is deemed to be disabled or not. In addition to being under the care of a physician licenced in Canada, below are the disability definitions that are used by insurance companies when determining claim eligibility:
Own Occupation – This is the most generous definition in terms of determining if someone will qualify for a disability insurance benefit. Under this definition, you are deemed to be disabled if you cannot perform the regular duties of your own occupation. It is the most expensive disability definition to acquire and often only offered to individuals in the top occupational classes (doctor, lawyer, accountant, etc.). Under an Own Occupation definition, you are allowed to have other gainful employment, as long as you cannot do your own job. For example, a surgeon who loses their precision can no longer perform the duties of their occupation; however, they can work as a university professor and continue to be deemed disabled as it pertains to their disability insurance policy.
Regular Occupation – Under this definition, you are deemed to be disabled if you are unable to perform the duties of your occupation and are not working in any other gainful occupation. The difference between Regular Occupation and Own Occupation is the wording on “any other gainful occupation.” Using the surgeon example above, a Regular Occupation definition policy would not pay a disability benefit to the surgeon if they also chose to work as a university professor, despite not being able to perform their surgical duties. This is a suitable definition for the majority of occupations.
Any Occupation – This is the strictest definition (& least expensive) used by insurance companies when determining your disability status. Only if you are unable to perform the duties of any gainful occupation in which you are reasonably qualified, based on training, experience, and education, then you will be deemed to be disabled. Policyholders might also come across a definition labeled Reasonable Occupation, which is very similar to Any Occupation.
Lastly, another common disability definition is Limited Regular Occupation Period, which might include 24-months of Own Occupation or Regular Occupation coverage, and then converting to the stricter Any Occupation after the initial 24-months of benefits. This definition is most frequently seen with disability insurance offered through Group Benefit Plans. With personally-owned disability insurance, many insurance carriers will allow you to purchase a Regular Occupation extender at an additional cost.
Disability insurance can be a complex product with various components – it is important to consult with an insurance advisor to fully understand your coverage.
DISCLAIMER: This article is not meant to decide claim eligibility. The terms and conditions of your own policy or any Group Benefits Plan will determine your qualification for any disability benefits.