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Any occupation disability insurance: What you need to know in 2021

An any occupation definition of disability states the policyholder may only qualify benefits if the disabling event prevents them from working in any capacity.

Own occupation disability insurance. Any occupation disability insurance. Hybrid disability insurance.

There appear to be many choices of disability insurance coverage that you need to understand and choose from when searching for the right disability policy. This article will take the guesswork out of it for you.

Let’s start with our main topic: any occupation disability insurance.

What is any occupation disability insurance?

Dr. Adam Smith was a thoracic surgeon who made a nice living specializing in operating on the heart, lungs, esophagus, and major blood vessels inside people’s chests — up until about a year ago.

After surgery one afternoon, Adam went home and began playing basketball with his son on the small court behind their home. The basket was set at the height of 8 feet instead of the usual 10 feet because Adam’s son was young and unable to shoot a basketball into a basked set at an adult height.

While enjoying time with his son, Adam decided to relive his glory days and jump as high as he could as he approached the basket so he could dunk the basketball. It was meant to be fun, but that event changed Adam’s life, and his family’s, forever.

As he slammed the ball through the net, Adam’s right index finger got caught in the collapsible rim between the backboard and the rim itself. Then, as Adam’s body descended from the jump, his finger detached just above the knuckle and stayed lodged in the basket’s rim.

Emergency surgery was performed that afternoon to re-attach Adam’s right index finger. Unfortunately, that surgery was unsuccessful. Adam’s career as a surgeon ended that day.

That’s a sad story, but it gets even grimmer. Adam had the foresight to purchase a disability insurance policy between surgeries several years before from an insurance agent making the rounds at the hospital where Adam practiced. The inexperienced agent had good intentions, but he made a grave mistake — he sold a highly-skilled surgeon, Adam, an any occupation disability insurance policy.

What did that mean for Adam? It meant that he had to find employment in any occupation he was reasonably suited for based on his education, experience, and age. Adam was only 32 years old, and all he had ever trained for, and done professionally, was be a thoracic surgeon.

Because of his policy's any occupation stipulation, Adam’s claim for disability payments was never honored. Adam’s waiting period before receiving benefits was 90 days, during which time Adam was discharged from the hospital and, except for missing his finger, was in excellent health.

Adam can no longer operate and went through an adjustment period. But, through a friend, he found a job he could tolerate as a commercial real estate appraiser. Because he minored in business as an undergraduate, Adam was deemed to be educated for that position, and others, in the business world.

Without the education he had received in business, it’s quite possible Adam would have had his disability claim approved and received 60% of his annual income until he reached age 65. He wouldn’t have been suited for any other profession because of not having had experience or training in anything other than being a surgeon.

You may be wondering who would ever buy a policy with an any occupation definition. Good question.

Someone, for example, who had a career as a musician and lost the use of a hand could still work in that field, even though they were now disabled, since they could conceivably teach music as a profession. They wouldn’t benefit from an “own occupation” policy, but should still have an “any occupation” policy in case of a severe illness or injury, like totally losing their eyesight.

And, as you can probably guess, since the insurance company is taking on a smaller amount of risk with an “any occupation” policy versus an “own occupation” policy, your premiums will be lower for the former.

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Why own occupation disability insurance is better

A more experienced insurance agent would have recommended own occupation disability insurance to Adam. With the own occupation definition in his policy, Adam would have received his monthly benefit from the insurer because he could no longer perform the duties of his specific occupation, a surgeon, because of his permanent disability.

In addition, with own occupation disability coverage paying him each month, Adam could have taken the time to train for another career, perhaps gone back to college, and embarked on a new journey in a new profession without losing the long-term disability payment he would receive until he turned 65.

Adam had, at one point in his life, considered studying psychiatry. With own occupation coverage, Adam could have gone back to college and got his degree to practice psychiatry and wouldn’t have lost his monthly benefit from not being able to perform surgery.

Choosing the right definition of disability for your policy

If you already are covered by a disability insurance policy, read your policy carefully and see if you have any occupation or own occupation coverage. If you’re still not sure after reading it, contact policyholder support at the insurance company that issued you the coverage and have them clarify what you have. Have them tell you precisely where that definition is written in your policy, so you can find it and highlight it.

If you’re considering applying for a disability insurance policy, now that you know the difference between the two definitions regarding occupation, you’re in a much better position to select the definition that best suits you.

Besides not playing basketball that fateful afternoon, if Adam had one thing he could do over, it would be that he had worked with an experienced insurance agent who would have recommended the correct type of coverage for Adam’s profession. Having the wrong kind of disability insurance can be very costly for you if the policy’s definition of occupation doesn’t fit your profession.

If you’re still not sure, you can always talk with a qualified, experienced agent and have them show you, in writing, which definition of occupation will apply to you.

And, if you get your disability insurance through work, check if it’s any occupation or own occupation. If it’s any, get with an agent and take a look at own occupation coverage. It will cost you more than your group policy at work, but it could be well worth it if you ever need to file a claim.


Having grown up in upstate New York, Bob Phillips spent over 15 years in the financial services world and has been making freelance writing contributions to blogs and websites since 2007. He resides in North Texas with his wife and Doberman puppy.

The information and content provided herein is for educational purposes only, and should not be considered legal, tax, investment, or financial advice, recommendation, or endorsement. Breeze does not guarantee the accuracy, completeness, reliability or usefulness of any testimonials, opinions, advice, product or service offers, or other information provided here by third parties. Individuals are encouraged to seek advice from their own tax or legal counsel.

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