The ability to earn an income is likely your greatest asset. When you’ve invested in a career that affords you and your family a substantial income, it’s even more important to protect that income with insurance.
Disability insurance is designed to do just that. It helps to protect your income in the event that an injury or illness prevents you from working. As such, disability insurance — along with life insurance and health insurance — are integral parts of any comprehensive financial plan.
However, it’s important to understand that not all policies are equal. Some disability insurance policies protect your income if you’re unable to work in most professions, which is fine for most people. But for more specialized professions — particularly in the medical field — it's important to get a policy that covers you if you’re unable to perform your duties (because the type of disability that might prevent you from doing surgery may not prevent you from office work). If you’re ever in that situation, you want a policy that will offer the most flexibility possible.
What is own occupation disability insurance?
Own occupation disability insurance is a type of occupation-specific disability insurance. It’s designed to cover you if a disability prevents you from working in your own occupation — such as performing surgery.
How does own occupation disability insurance work?
While definitions can vary from company to company, own occupation disability insurance policies will typically pay a benefit if you’re unable to perform the “substantial and material duties” of your “regular occupation.”
Your regular occupation is defined as the occupation you have at the time of your disability.
Do I need medical specialty own occupation disability insurance?
It’s possible that you’ll hear that it’s important to get a policy that further defines the duties of your career to ensure that you’ll be covered. This type of policy is sometimes called “specialty own occupation disability insurance.” While this may sound good, specialty own occupation policies may actually limit what’s covered by narrowing your job duties and title in a way that prevents your policy from evolving as your career does.
The reality is that a policy that defines disability based on your regular occupation is a better option because the more specific the definition, the greater the chance that it may not apply as your profession evolves. A broader definition of your regular occupation means you’ll be covered as the duties of your career evolve.
Types of own occupation disability insurance
Own occupation disability insurance comes in a variety of different types, with each working in slightly different ways. At Northwestern Mutual, we have three types of policies, highlighted below.
Modified Own Occupation
With modified own occupation disability insurance, you are eligible to collect the full monthly benefit provided by your policy in the event that you become unable to perform the substantial and material duties of your regular occupation — but only so long as you are not working in another career.
True Own Occupation
With true own occupation disability insurance, you are eligible to collect the full monthly benefit provided by your policy in the event that you become unable to perform all of the substantial and material duties of your regular occupation. This remains true regardless of whether or not you are able to work in a new career. If you do work in a new career, the amount of money you earn does not impact your benefit amount.
Medical True Own Occupation
This may be a good option for someone who spends the majority of time treating patients and has a mix of clinical and procedural duties, as this policy has more options for how benefits can be paid, allowing you to be eligible to receive the full benefit for total disability in one of two ways:
You become unable to perform all of the substantial and material duties of your regular occupation, no matter how much you make in a new career.
You become unable to perform some of your substantial and material duties, and you find yourself not working, so you may also qualify as totally disabled and collect the full monthly benefit.
Who needs own occupation disability insurance?
True own occupation disability coverage can be an incredibly powerful tool for protecting your ability to earn an income, but that doesn’t mean that it’s the right form of coverage for everyone. Ultimately, the right policy for you will be based on your needs and goals.
Not sure whether or not own occupation coverage is the right kind of disability coverage for you? A financial advisor can help you understand your options and how disability insurance fits into your larger financial plan.
To be used with form ICC16.TT.DI.IIB.(0916), ICC16.TT.DI.FIB.(0916), ICC16.TT.DI.CAT.(0916), ICC16.TT.NCDI.(0916), ICC16.TT.GRDI.(0916), ICC16.TT.DI.PDB.(0916), ICC16.TT.DI.PDBO.(0916) ICC21.TT.DI.TRU.(0221), ICC21.TT.DI.MTO.(0221), or state equivalent. Not all contracts and optional benefits are available in all states. Disability insurance policies contain some features and benefits that may not be available in all states. The ability to perform the substantial and material duties of your occupation is only one of the factors that determine eligibility for disability benefits. These policies also contain exclusions, limitations and reduction-of-benefits provisions. Eligibility for disability income insurance, additional policy benefits, and qualification for benefits, is determined on a case-by-case basis. For costs and complete details of coverage, contact your Northwestern Mutual Financial Representative.
Northwestern Mutual is the marketing name for The Northwestern Mutual Life Insurance Company, Milwaukee, WI (NM) (life insurance, disability insurance, annuities, and life insurance with long-term care benefits)
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