Being marooned on a desert island, as was a character played by Tom Hanks in the movie “Castaway,” is not unlike the situation faced by someone who is totally disabled.
In the movie, after his plane crashed into the ocean, the mans life was saved when he washed up on an island. But he remained isolated there until he built a raft and returned to civilization.
Disability insurance, like an island, can sustain a persons life–at least the financial life. But a monthly disability benefit may not be enough to allow a disabled insured to return to self-sufficient financial stability.
The good news is that a feature in many disability policiesthe rehabilitation benefitcan be that life raft.
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The rehabilitation benefit creates a winning proposition for both the claimant and the insurance company, and I believe it represents the future of individual disability income insurance. Here is why.
Own-occupation has been the traditional preferred benefit of individual disability insurance. It provides a benefit for someone who is unable to perform the material and substantial duties of his occupation, but who may be able to work in another occupation.
“Own-occ” makes sense for someone whose primary occupation requires specialized skills, but whose general skill or knowledge lends itself easily to other related but different occupations. Surgeons, for example, can benefit greatly from own-occ. This coverage compensates them for the loss of primary profession if disabled, even if they can still use their medical education and experience to be teachers or administrators.
But consider the more likely scenarioa person who wishes to someday return to the occupation enjoyed before becoming disabled.
Here, a monthly DI benefit is crucial, in that it prevents compounding the physical disability with financial disability. However, it ignores the basic tenet that people often identify their self-worth and gain self-esteem from their ability to work and be productive.