Disability Insurance

Definitions of Disability

Different policies offer many characteristics and definitions for disability including:

Any Occupation: This is the strictest definition in which the insured is considered disabled only if he or she is unable to perform any duties pertaining to any occupation.

Modified Any Occupation: Disability applies only if you are unable to perform any duties pertaining to any occupation for which you have been trained, received education or have work experience.

Own Occupation: This is the most flexible definition for liability. You are deemed to be disabled if you are unable to engage in the principal duties of your own occupation. Most insurance carriers are doing away with this definition.

Split Definition: This definition can be within one's own occupation for a specific time period or with any occupation after the maximum benefit period has passed. 

Loss of Income: This definition avoids the problem of having to determine partial or total disability. A policy with this definition pays the insured in the event of loss of income due to illness or injury.

The Impact of Disability Definitions

How your disability policy defines disability will influence many things including:

• When you are eligible to receive benefits
• How much the policy will cost - the stricter the definition, the higher the cost
• How long the benefits will last

Duration of Benefits

When talking about disability insurance there are two types of duration: 

Short Term: This type of coverage provides coverage for disabilities of up to two years, but most policies pay up to six months on average.

Long Term: This type of coverage protects for a longer time period (on average more than six months), often until age 65 or for life. 

Certain exclusions may apply to disability policies that are worth identifying, and these may vary from policy to policy.