What is own-occupation disability insurance?

Own-occupation policies allow you to claim disability insurance benefits even if you can earn an income doing something other than your most recent job.

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Amanda Shih

Amanda Shih

Editor & Licensed Life Insurance Expert

Amanda Shih is a licensed life, disability, and health insurance expert and a former editor at Policygenius, where she covered life insurance and disability insurance. Her expertise has appeared in Slate, Lifehacker, Little Spoon, and J.D. Power.

&Elissa Suh

Elissa Suh

Senior Editor & Disability Insurance Expert

Elissa Suh is a disability insurance expert and a former senior editor at Policygenius, where she also covered wills, trusts, and advance planning. Her work has appeared in MarketWatch, CNBC, PBS, Inverse, The Philadelphia Inquirer, and more.

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Disability insurance protects you from the financial risk of losing your income if you become sick or disabled and you can't work. Whether or not you qualify for insurance benefits depends on your insurance company and their definition of disability.

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Own-occupation disability insurance allows you to claim disability insurance benefits even if you can earn an income doing something other than your most recent job. That means you have to be disabled, but your disability doesn’t have to be so severe that you can't work at all.

An own-occupation policy is the most lenient type of long-term disability insurance, and also the one that best protects your income. If you would not be able to make your current earnings in a new occupation or career when you become disabled, you should get an own-occupation policy. While own-occupation disability insurance may cost more than other types of disability insurance, it ensures you're getting the most out of your coverage.

Key takeaways

  • You have to meet the policy's definition of total disability in order to qualify for full disability insurance benefits.

  • Own- and any-occupation disability policies define disability differently based on your ability to work a different occupation. 

  • An own-occupation disability policy pays you benefits when you’re unable to do your job regardless of whether you could work another job.

  • There are different types of own-occupation coverage, and some insurance policies use a mix of them and pay benefits accordingly.

True own-occupation disability

Under a true-occupation policy, disability insurance companies typically define total disability as “being unable to perform the material and substantial duties of your occupation, even if you are gainfully employed in another occupation." That means you can receive disability insurance benefits if your disability makes it so you’re unable to work in your job, but not necessarily another job. 

For example, let's say a dentist gets into an accident and loses their fingers, rendering them unable to work their normal duties. If they have an own-occupation policy, the insurance will pay them disability benefits, even if they decide to start down a different career path.

Some policies will consider your occupation to be your greater profession — like medicine or law — while others may narrow it down to a speciality like dentistry. Talk to your insurer to make sure you understand how it covers your profession. If you're unemployed at the time you become disabled, the insurer will consider your occupation to be the last job that you worked regularly (usually 30 hours a week). 

True own-occupation coverage is also known as "own-occupation" or "regular occupation."

Other definitions of own-occupation disability

There are a few variations on own-occupation disability insurance, and it’s common for companies to take these into account when offering you a policy.

For example, some policies may start under a true own-occupation definition disability, but then define disability in a different way after you receive benefits for a few years. If you’re shopping for a long-term policy, the licensed experts at Policygenius can help you compare quotes for disability insurance and explain the differences between policies.    

Transitional own-occupation disability 

With transitional own-occupation coverage, the insurer pays you an adjusted benefit, usually based on your earnings from the job you take while you’re disabled. If you make less in this new job than in your old occupation, the insurance company may only pay the difference. 

For example, let’s say after becoming disabled, the dentist decides to take a new job as a lecturer and is paid $5,000. The benefit under their transitional occupation coverage is for $8,000 per month. The insurance company could reduce the benefit payment to $3,000 under a transitional own-occupation disability policy. 

How the exact benefit amount is calculated should be outlined in your policy. Keep in mind that the insurance company won’t pay you benefits if you’d end up receiving more than your original earnings. 

Modified own-occupation disability 

With modified own-occupation disability insurance, you are ineligible for benefits if you start working another job. That’s why you might see this type of coverage referred to as “own-occupation, not working” or "own-occupation, not-engaged." 

When you become disabled and file a claim, the insurer will only pay benefits if you don’t take on another job. If you start working, regardless of the occupation, you will not receive disability benefits.

For example, let's say the dentist who lost their fingers decides to start working as a lecturer. They would not receive any benefit payments under a modified own-occupation policy.

→ Learn about other types of disability insurance 

Own-occupation vs any-occupation disability

Under any-occupation disability insurance, you'll be ineligible for disability insurance payments if you have the ability to work another occupation, regardless of whether you actually take another job. This is the strictest provision under definitions of disability. You may pay lower premiums for this type of policy, but you’ll be at a disadvantage if you have an injury and can’t file a disability claim because you technically could work elsewhere.

Insurers sometimes offer policies that use both own-occupation and any-occupation definitions of disability. For when you become disabled, you can receive disability insurance benefits even if you can do work other than your regular job (own-occupation definition). After a specified period of time ends, if you're able to do other work (any-occupation definition), you'll no longer be eligible for benefits and your monthly benefit will cease. The length of time before the policy switches from own- to any-occupation coverage is defined in your policy. 

Let’s go back to our example. The dentist loses their fingers and decides not to take another job. They receive total disability benefits under own-occupation coverage. After the benefit period ends, the policy now switches to any-occupation coverage.  The insurance company will not pay benefits if the dentist is able to resume work — in any job.

If you have group disability insurance it may operate using both own- and any-occupation definitions of disability, so you can supplement your coverage with an individual long-term policy. 

Own-occupation disability FAQ

What is the difference between an own-occupation and an any-occupation disability insurance policy?

Own-occupation disability insurance provides coverage when you can’t perform in your current job, while an any-occupation disability policy only covers you when you can’t work in any job. An own-occupation policy, unlike an any-occupation plan, isn’t dependent on your employment, so you can start working a new, unrelated job and still get disability benefits.

Why is an own-occupation definition for disability so valuable?

The definition of disability determines if you receive benefits if you become disabled. Having a policy that uses an own-occupation definition provides better income protection because you can more easily qualify for benefits when you file a claim compared to an any-occupation definition.

How long does own-occupation disability insurance last?

With some long-term disability insurance policies, your own-occupation coverage only lasts a certain period of time, like two or three years of the benefit period. After that, your policy could use a modified-own-occupation definition of disability or become any-occupation disability policy. Check with your insurer to understand when your benefits pay out and how long they last.

Authors

Editor & Licensed Life Insurance Expert

Amanda Shih

Editor & Licensed Life Insurance Expert

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Amanda Shih is a licensed life, disability, and health insurance expert and a former editor at Policygenius, where she covered life insurance and disability insurance. Her expertise has appeared in Slate, Lifehacker, Little Spoon, and J.D. Power.

Senior Editor & Disability Insurance Expert

Elissa Suh

Senior Editor & Disability Insurance Expert

gray twitter icon linkgray linkedin icon link

Elissa Suh is a disability insurance expert and a former senior editor at Policygenius, where she also covered wills, trusts, and advance planning. Her work has appeared in MarketWatch, CNBC, PBS, Inverse, The Philadelphia Inquirer, and more.

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