Disability Income Insurance Decoded

By Calvin R. Rasey

Specialists are a critical part of the world of medicine. Internists, pediatricians, neurologists, and other specialists are knowledgeable and able to read an x-ray, but may miss what the trained radiology specialist, who examines scores of such images each day, sees as a matter of course. In the same respect, parents will most likely first visit the pediatrician when her child has a head ache, not a neurologist.

Why do individuals seek the assistance of specialist for their health needs, but not necessarily for their financial needs?

Of course most educated adults can spot the common cold and balance their own checking account, but when issues become more complex, why not seek the help of an expert in that field?

Disability income insurance is becoming increasingly vague, and the need for having an expert review is more important than ever.

A trained professional who understands the legal language insurance companies employ and can spot the subtle details that can alter the entire nature of a policy is crucial in making an informed decision. Furthermore, an individual who is not beholden to a specific insurance company can typically determine the best possible plan for the client’s specific needs.

One specific aspect of disability insurance the can be unclear is the definition of Total Disability and Own Occupation. Many companies are stating Own Occupation provisions when, in fact, it’s almost a misrepresentation. Insurance companies define Own Occupation in a myriad of ways:

  • Unable to perform substantial and material duties of regular occupation , meaning no matter what in this world one be qualified to do, if they cannot continue their current occupation in the same manner they did yesterday due to a disability, they would be viewed 100% disabled and collecting 100% of the benefit.
  • A loss of earnings of at least 20% and unable to perform duties. This type of contract is very vague due to the words “perform duties”. Are those the specific duties that one performs to earn a living? Are those the duties another individual in the same specialty may do to earn a living? Or are those any duties that a person with a medical degree is qualified to execute?
  • Unable to do material and substantial duties of own occupation and not gainfully employed. The words “gainfully employed” are scary. Who makes that call? Typically not the insured.
  • Unable to perform main duties of regular occupation and not employed in any occupation. Again the words “any occupation” are vague. For example, one may not be able see patients in the practice, but may be able to manage the office. “That ‘s an occupation, and the contract would not pay a benefit.
  • Unable to perform substantial and material duties of regular occupation for the first 12 months (or 24 months) of total disability, thereafter not gainfully employed. This is a great contract for one or two years, but after that period of time an individual may lose their benefits if they are able to work somewhere somehow.

The contracts chat have included “not gainfully employed” within their definitions are now written Own Occupation without too much emphasis on that one little – very important – caveat. The companies that have changed their definitions imply that their responsibility is to insure one’s income, not occupation. Unfortunately, most disabled physicians know they need more than simply income coverage.

Interpretations of definitions are far more stringent when viewed by the claims and legal departments than by the marketing department and claim filing time is by far the worst time to debate with the claims personnel, and the legal department has no sympathy for “Well, I thought … ”

Own Occupation is not the only clause in insurance policies that has an indistinct definition, phrases such as “Non Cancelable, Guaranteed-Renewable” are finding new meaning in the small print of some disability plans. It is imperative that individuals seek the help of a disability specialist that is completely independent, representing only the client’s needs and interests. Someone who can analyze and interpret the often-confusing definitions employed by all of today’s disability insurance contracts. A disability plan needs to fit one’s needs and occupation, and the plan needs to be 100% intact when and if the client is in need.


Calvin R. Rasey is president of Physicians Financial Services II, LLC.

Securities Offered Through Securities America, INC. *Member FINRA/SIPC • Calvin R. Rasey • Registered Representative Advisory Services offered through Securities America Advisors, INC. • A registered Investment Advisor Calvin R. Rasey • Investment Advisor Representative of Securities America & its representatives do not provide tax or legal advice. The opinions and forecasts expressed are those of Calvin R. Rasey, are general in nature and cannot be guaranteed. Securities America and its representatives do not provide legal advice. For questions about a specific situation please consult your legal advisor. Physicians Financial Services II, LLC and Securities America Companies are NOT UNDER Common Ownership.