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True Own Occupation Definition

The most liberal definition of disability is the True Own Occupation definition. This is defined as being totally disabled or unable to perform the material and substantial duties of your occupation at the time of sickness or injury. Under this definition you would still be entitled to benefits if you are able to work in a different field. This definition became incredibly popular in the late 1960’s, especially amongst white collar professionals such as doctors and attorneys.

For example, let’s say that you have a 35 year old client who is a surgeon. A severe finger injury prevents the surgeon from holding a scalpel, but the surgeon is otherwise completely healthy. If the client has a True Own Occupation definition on the Disability contract, he or she would be eligible to receive full benefit— even if he or she begins doing something else and the new occupation ends up paying even more money than the client’s previous career.

Sound like a pretty good plan? Well, it’s been almost too good. When there is such a liberal definition on non cancelable contracts issued to a large number of very high income earners, the frequency of claims filed and the amounts of benefit being paid can cripple an insurance company—especially because premiums are waived while benefits are being received. Therefore, many carriers ceased to offer this definition. Some carriers were affected so adversely by these types of claims that they pulled out of the disability market completely, or aligned themselves with other carriers.

The good news is that True Own Occupation is still available. Several of our carriers do offer this definition on their non cancelable products. However, this definition is limited to select occupations within the top two or three classes and can further be restricted by industry, age, income, state of residence, benefit period or all of the above. True Own Occupation is offered only as an extra cost option to this group. The most restricted industry is the medical field. Very few carriers offer True Own Occupation to surgeons up to age 65. Only one carrier offers it to Dentists. However, you can still let your qualified clients or prospects know that True Own Occupation coverage to age 65 is a possibility.

Somewhat more readily available are contracts that offer a True Own Occupation definition for two or five years—once again, depending on age, occupation, and state. Even with these limitations, the premiums for this type of coverage are usually among the highest on the market. In some cases, it has become so expensive that many highly compensated professionals are willing to forgo this definition for more affordable premiums. See the Sales & Marketing Ideas file in • Broker Resources.

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