From the perspective of a disability insurance claims consultant and an expert witness for inappropriately denied claims, it seems as if the number of denied claims has increased over the past decade. It seems that one of the biggest reasons for claim denial is that the claimant is not satisfying or understanding the various “own occupation” definitions of “total disability.”
Basically, there are three “own-occ” definitions for total disability.
One definition is referred to as a “pure own-occ” because it contains no splits (no “thereafter” wording) and goes for the full benefit period.
The other two are split definitions. These versions of the definition do contain that claim killer word “thereafter.” They are usually “own-occ” initially and then change to a less liberal definition at some point–usually after 5 years and for the remainder of the benefit period.
The policy’s definition of total disability usually initially reads, “Unable to do all of the substantial and material duties of your occupation (or occupations).”
This is a warning to those who would like to believe that the “own-occ” definition offers a free ride to retirement city. That might be so if the claimant has only one major duty, but what happens if the claimant has more than one?
Consider scenarios for the following claimants:
o They can do some, but not all of their duties.
o They are retired and not yet 65.
o Their occupation is different at the time of disability than at the time of the application.
o During a residual claim, income drops because of economic reasons rather than medical reasons.
Does that mean these hypothetical claimants won’t be paid?
Here are some possibilities:
? Pure Own Occupation Definition (no split)
“Own-occupation for the full benefit period” is the best of the 3 types of definitions. It allows the claimant to be paid the full monthly benefit amount, for the full benefit period, even though the claimant is working in an unrelated occupation/duty. (Note: The definition looks at the occupation(s) being performed at the time of claim, not at time of application!) This definition is available from most carriers and is offered primarily to white-collar workers, especially those who have a large investment in their education or some other criteria the carrier has set forth based on claims experience and, to some extent, the competition.