Look Beyond The Definition Of Disability

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Theres a tired debate that keeps rearing its ugly head in the disability income protection business: “Which definition of total disability is better–true, pure own occupation, or (fill in the blank)?” (See chart below.)

But thats off the point of what consumers need, which is help selecting the policy best for their situation.

This is an important issue to consider not only for the traditional individual DI market, but also for the group disability market.

Thats because, in the employer environment, supplemental individual disability products can offset sources of income not covered by most group policies. (For example, many group products have a standard offset for Social Security disability that individual policies provide by rider.)

So, lets unpack the issue. The “which definition is better” argument has taken many forms over the years.

Theres been own occ vs. any occ, own occ vs. loss of earnings, true own occ vs. own occ not working, and own occ vs. loss of time and duties, among others.

But all these variations miss a crucial point: By setting up the argument as an exclusive “either/or” comparison, the question may be easier to understand, but a lot gets lost in the simplification. This is especially true now, as product evolution in recent years has made the definition of total disability less important.

Let me explain. The typical policy comparison, done this way, is based on total disability that prevents the insured from working in his or her own occupation. Here, the producer asks: “If the client cant perform his or her own occupation but can earn income in another occ, which definition pays more money in benefits to the client: the own occ definition or that other definition?”

The problem is, when the question is asked that way, the producer stacks the deck in favor of the own occ definition–primarily because its a backward-looking comparison. It starts with the situation own occ was designed to address 20 years ago and tries to use it as a litmus test for judging any other definition of disability.

These days, most income protection clients are not well served by that kind of quasi-nostalgic, own-occ-centric view of income protection.

There are merits to both the own occ definition of disability and to alternative definitions, but the focus should be on communicating choice to customers, not pitting one definition against another.

Remember, todays disability insurance market has moved well beyond focusing on high dollar “specialty” occupations. Now, the industry seeks to reach earners at all income levels.

Therefore, its much more important to look beyond the definition of total disability. And income protection products are responding accordingly, evolving to be relevant to a greater variety of situations.

Perhaps a better question for marketers to ask is: “Which of the following is more likely to occur after a disability: returning to ones occupation full time, returning part time due to disability, or beginning a new job?”

The answer to such a question will help determine the features and benefits necessary for each individual.

Choice is central to todays marketplace, and an important foundation of the disability insurance industry.

Therefore, agents and brokers must work closely with customers to decide which policies best meet each persons income protection needs and financial resources.

True own occ may make sense for one customer, whereas a different definition may be best for another.

Whats most important is to choose a policy that responds effectively to the customers potential needs in a variety of situations. Take a holistic look at the contract features, including residual and recovery benefits, work incentive benefits, rehabilitation benefits, catastrophic benefits, and LTC conversion benefits. The proper choice for any individual is based on need, preference and cost.

In sum, product evolution makes presenting an income protection policy an entirely different proposition for producers. The key question producers should pose to customers is not “what happens if you cant do your old job?” but “how does your policy respond to all the different ways you might be disabled?”

is director, individual product and market development for UnumProvident Corporation, Chattanooga, Tenn.. His e-mail is jmfoley@unumprovident.com.


Reproduced from National Underwriter Life & Health/Financial Services Edition, July 29, 2002. Copyright 2002 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.