Different definitions of Disability

Different definitions of Disability

Unlike Life Insurance which is quite straightforward, Disability Insurance can be a little more complicated and technical. One of the things important to understand in a Disability Insurance policy the definition of Disability. There are three most common definitions of total disability used in injury and illness insurance contracts are:

Any Occupation

Under this definition, total disability means the inability to work at any occupation. Therefore, if you are a software engineer and your disability prevents you from performing your regular occupation duties but you can still gainfully work as a librarian, you will not receive a cent.

Regular Occupation

Under this definition, total disability means the inability to work at your regular occupation do to an injury or an illness.

Own Occupation

This is the most superior form of coverage in terms of defining disability.  Here, total disability is also defined as the inability to work at your regular occupation regardless of whether you work in another gainful occupation.

A better definition of disability will come at a higher monthly cost, keeping other factors the same. The reason for this is that a better definition of disability increases the likelihood of the insurance company to pay out the claim, hence a higher premium. Any Occupation definition leaves a grey area at the time of claim if the insured has the ability to be gainfully employed in another occupation.  The upgrade from Any Occupation to Regular Occupation provides significant value. However, the upgrade from Regular Occupation to Own Occupation can be questionable in certain instances.

An Own Occupation definition provides the most value in a highly skilled occupation such as a surgeon but less value for occupations such as an Administration manager or office manager. The reason for this is a surgeon could easily have an injury to his/her hands which prevents them from being a surgeon but allows he/she to work as a family physician. In this instance the insured would continue to receive his/her disability benefits even though he/she is gainfully employed as a family physician. The likelihood of an Administration Manager or even a lawyer collecting under the Own Occupation definition is significantly lower.

 

Related Articles and News:

Financial aid is available for the disabled  

http://www.theglobeandmail.com/globe-investor/personal-finance/preet-banerjee/financial-aid-is-available-for-the-disabled/article2245909/

 

Disability Insurance: its Importance and Significance

  • For someone under 65, there is 60% more likelihood to become disabled than to die without any ailment.
  • The second leading cause of bankruptcy in Canada, behind over extension of credit, is a disability of some kind.

 

Disability Insurance  from RBC Insurance

RBC Insurance has four Disability Insurance Plans

1. Professional Series policy provides a long-term individual disability income protection to fee-for-service /non-salaried professionals……

 

Disability Insurance is an income benefit and hence that is what makes it a little more complicated. For further information on Disability Insurance, please feel free to contact Aman Kapur at www.youinsuranceguy.ca or by phone 1-416-509-2540 to assist with the plan of your choice. Or simply click here to request a quote

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