Disability insurance replaces your income when you’re hurt or injured and can’t work. Own-occupation is just a specific variation of a disability insurance policy — “own occupation” means you can still collect benefits even when you go back to work, provided you’re still unable to do your old job.
While own-occupation disability insurance can be more expensive than policies with less protection, but it’s the best way to protect yourself, and is especially valuable if you have a high income or spent years training for your job.
What is an own-occupation disability insurance policy?
Own-occupation disability insurance isn’t exactly a kind of policy, it’s just regular long-term disability insurance with the widest possible definition of what qualifies as a disability (meaning it offers the most protection).
Own-occupation disability insurance will pay out if you’re hurt or injured and can’t work in the job that you had when you got the policy, even if you can do a different kind of job. That means you can keep getting disability insurance payments while you’re earning an income.
Policies with different definitions of disability can be more restrictive, and might only pay out if you can’t work at all.
How does own-occupation disability insurance work in real life?
Let’s say that you’re a surgeon. If an injury makes it impossible for you to work as a surgeon, but you’re still able to work teaching med students, you can still earn benefits under the terms of an own-occupation disability policy.
With own-occupation coverage, you can keep collecting disability payments for as long as you’re unable to go back to work as a surgeon, even if that’s the rest of your career (assuming your benefit period lasts that long).
Who should get own-occupation disability insurance?
Own-occupation disability insurance is worth having if your education, professional training, or employment history qualify you for one specific type of job, or if your job is especially physically demanding.
An own-occupation protects the investment you made in your career if you suddenly can’t do the job you trained for.
If you’re a doctor or lawyer, for example, your schooling and the years of hands-on experience your job requires would make it hard for you to match your income in another role. Own-occupation disability means you can still collect benefits even if you get another, lower-paying job — so you can keep up with your expenses and maintain your lifestyle.
Types of own-occupation disability insurance
Even within own-occupation disability insurance there are different types of coverage. Here’s what you need to know:
Type of own-occupation coverage
What it means …
The most protection — you can receive disability benefits even if you can still work, as long as you’re unable to do your previous job.
Your benefits can cover the difference between your new and old incomes.
Modified own-occupation disability
Pays benefits just until you start working in another job.
Two-year true own-occupation:
Coverage changes from true own-occupation modified true own-occupation after two years.
Two-year modified own-occupation
Modified own-occupation for the first two years you’re disabled, then you can only get benefits if you can’t work at all.
Own-occupation vs any-occupation disability insurance
Any-occupation disability insurance means you can’t collect payments if you can still work in any job that fits with your education or training, even if you’re unable to do the job you had when you got your policy.
That means that if you can no longer work as a surgeon but you can teach surgical students, you may not be able to get any benefits from an any-occupation policy.
Any-occupation disability insurance is cheaper than own-occupation, but the terms of the coverage are much narrower.
If you have a highly specialized job, own-occupation coverage is a better option. Otherwise you risk not being able to collect payments after an accident if you can still work — even if your new job pays much less than your old one did.
Where can you get own-occupation disability insurance?
You can get own-occupation disability insurance by shopping around yourself or through a group disability policy offered by your job — though you’re likely to get only two years of own-occupation coverage though a work plan.
You have more control over an individual disability insurance policy you get for yourself, and you can take it with you even if you leave your job, which is why we recommend getting personal long-term disability insurance with own-occupation coverage.
Here are some things to keep in mind when you compare disability insurance quotes:
The company’s definition of disability: Read any terms carefully to make sure to get the coverage you want, not all own-occupation coverage is the same.
Financial strength ratings: Own-occupation disability coverage is a long-term affair, which makes finding a financially secure insurance provider very important.
Customer service scores: You want an insurance company that is easy to work with if you ever have to make a disability claim.
Companies with own-occupation disability coverage
Not sure where to look for own-occupation coverage? Start with our list of best companies for disability insurance.
What we like …
AM Best rating
Includes a survivor benefit for your beneficiary if you pass away.
Offers lifetime continuous benefits for total disabilities, even after the policy expires.
Offers a future insurability rider that's good until your 60th birthday.
Offers a lump-sum payment of $62,400 in addition to regular benefits if you're presumptively disabled.
Includes a family care benefit if you have to take time off to care for a sick loved one.
How much does own-occupation disability insurance cost?
Own-occupation disability insurance costs more than other types of coverage, but that’s because it offers more protection. Disability insurance typically costs about 1% to 3% of your annual salary, but you could pay an extra $100 or more each month for own-occupation coverage.
Your disability insurance rates also depend on your age, health, medical history, lifestyle, job, income, and whether you have any risky hobbies or habits. The details you choose for your policy, like your benefit amount and period, will also affect what you pay.