What Is Own Occupation Disability Insurance?

Ken Latus is a vice president of Insurance Solutions at Northwestern Mutual.

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 if 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.

But 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 some people. But for more specialized professions—particularly in legal and medical fields—you may want a policy that’s designed to pay out if you are unable to perform the duties associated with your specific occupation. That’s where own occupation disability insurance comes in.

Let’s take a closer look at what own occupation disability insurance is, how it works and how it differs from other types of disability insurance. We’ll also review the different types of own occupation insurance and answer other common questions to help you understand your coverage needs in discussions with your financial advisor.

What’s own occupation disability insurance?

Own occupation disability insurance is a type of disability insurance specific to your job. It’s designed to pay out if an illness or injury prevents you from working in your regular occupation, even if you could still perform another occupation.

High earners with specialized skills or those who underwent long training and education to be able to work in their chosen fields—like physicians, surgeons, dentists, lawyers and business executives and owners—often purchase own occupation disability insurance. It’s designed to protect their ability to earn an income even if they become disabled and can’t work in their previous role. It can help them avoid having to downgrade a career or accept a much lower-paying role to qualify for benefits.

What’s the difference between own and any occupation disability insurance?

As noted above, own occupation disability insurance provides you with benefits if a disability prevents you from being able to perform the duties associated with your regular occupation. Any occupation disability insurance, on the other hand, covers you if a disability prevents you from working any job for which you’re reasonably qualified.

Let’s consider a surgeon who loses the ability to hold a scalpel with her hands. With own occupation disability coverage, she could get a payout from her policy even though she could still work in another field like reading MRI results. But if that same surgeon had any occupation disability coverage, she would likely only be able to collect benefits if she was entirely unable to work in any job.

How does own occupation disability insurance work?

Because own occupation falls under the broader umbrella of disability insurance, it works in a similar way:

1. Purchase your policy

You’ll need to apply for coverage before you’re injured. The application may require financial and medical documents. It’s important that the policy provides long-term disability coverage if you become unable to work in your “regular occupation.” Your regular occupation is defined as the occupation you have at the time of your disability.

2. Pay your premiums

Once your policy is in effect, you’ll need to continue making your premium payments to maintain coverage. (Failure to make your payments on time can lead to a lapse in coverage and may even result in the cancellation of your policy.)

3. File a claim

If you become disabled and unable to work while you are covered by your policy, you’ll file a claim with your insurer. Start by reaching out to your financial representative or company to ask what forms you may need to fill out and what information the insurer needs. (At Northwestern Mutual, you can start a claim online.)

Who’s eligible for own occupation disability insurance?

While nearly any employed person is eligible to purchase an own occupation disability insurance policy, it can be particularly beneficial for individuals who:

• Are high earners;
• Work in highly specialized fields;
• Have invested a significant amount of time and money into their career; or
• Have completed education, training or experience that qualifies them to perform a single job or career.

Some situations that can illustrate the potential value of an own occupation disability policy may include:

• A dentist who loses dexterity in the use of his hands and as a result can no longer perform cleanings, exams, and other dental procedures.
• A trial lawyer who loses the ability to speak or communicate clearly and can no longer argue cases in a courtroom.
• An independent business owner working in a very niche industry who experiences a head injury resulting in diminished mental capacity.

Can self-employed individuals have own occupation disability insurance?

Yes, if you’re self-employed, you can purchase disability insurance to cover yourself (and your employees, if you have them) if you’re unable to work due to injury or illness.

This coverage can be any occupation or own occupation—it depends entirely on your needs and how much room you have in your budget for insurance. Talk with your financial advisor about what’s right for you.

Do I need medical specialty own occupation disability insurance?

You may 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 could prevent your policy from evolving as your career does.

A policy that defines disability based on your regular occupation may be 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 may remain 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 if you become unable to perform the substantial and material duties of your regular occupation—but only as 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 if 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 most of their time treating patients and has a mix of clinical and procedural duties, as this policy has more options for how benefits can be paid. This allows you to be eligible to receive the full benefit for total disability in one of two ways:

1. Working in a different role: 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.
2. Not working at all: You become unable to perform some, but not all, of your substantial and material duties, and you’re not working, so you may also qualify as totally disabled and collect the full monthly benefit.

Do I really need own occupation disability insurance?

True own occupation disability coverage can be an incredibly powerful tool for protecting your ability to earn an income even if you are unable to work in your chosen career—where your unique capabilities are your most valuable financial asset.

If you’re unsure whether or not own occupation coverage makes sense as a part of your financial plan, your Northwestern Mutual financial advisor can help. They can talk you through your options, including how different types of disability insurance may be able to protect your ability to earn an income even if you’re unable to work in your field.

Talk to your Northwestern Mutual advisor today about disability options tailored to meet the unique needs of doctors, dentists, lawyers, business owners and other specialized fields.Your advisor can look at how your money is protected and how it could grow and can talk through options that match your goals.

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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