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.

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.

That is where a rehabilitation benefit can “rescue” a person. It shifts the focus from the presentsimply surviving the life changes that disability bringsto the future, which focuses on resuming vocational productivity and financial stability.

This benefit consists of 2 components: continued benefits and additional costs.

Continued benefits continues the basic monthly benefit provided by the policy during a persons good-faith attempt at rehabilitation. Similar to own-occ, it allows the person to take that first step toward rehabilitation without fear of jeopardizing his financial situation.

Additional costs are the expenses incurred in participating in a rehab programexpenses not covered by any other plans, policies or programs. The benefit pays for items that may be unaffordable to a person on disability, such as education, adaptive equipment, and job or home site modification.

Expenses must be approved as part of a rehabilitation plan, but these additional costs are paid above and beyond the monthly benefit. That provides claimants the tools to return to work without compromising their often-precarious financial stability.

The rehabilitation benefit has long been available but frequently misunderstood. Claimants may be afraid to initiate the process because they fear a loss of benefits. Insurance companies may be concerned about appearing pushy by suggesting rehabilitation.

But use of this benefit can help form a partnership between insurer and insured to work toward a common goal. Rehabilitation can move the industry beyond simply providing financial support during a disability. It can help a claimant move toward a self-sufficient, financially stable future.

Like the raft in that movie, a rehabilitation benefit can be an integral component of a persons recovery from disability. It is the next own-occupation. It is the future of individual disability insurance.

Steven L. Brady, RHU, manager of individual disability sales and marketing at Standard Insurance Company, Portland, Ore. His e-mail address is sbrady@standard.com.


Reproduced from National Underwriter Life & Health/Financial Services Edition, February 27, 2004. Copyright 2004 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.