Table of Contents
Do not index
Do not index
It can be overwhelming with jargon and other complexities, especially when it comes to disability insurance for physicians.
Despite its importance, it’s always surprising to learn how few physicians, medical professionals, medical practices, HR members, or benefits departments understand specific policy provisions that dictate whether the disability policy is worthwhile.
Honing in on how ‘disability’ is defined in a policy is the key to understanding your policy. This crucial provision determines the circumstances in which an insured individual is eligible for benefits.
In this article, we focus primarily on the 'definition of disability’ and why it matters
The Importance of the 'Definition of Disability
It’s the yardstick that determines the circumstances under which an individual may qualify for benefit payments.
For example, depending on the policy language, even if an individual has a medical condition that hampers their ability to work, they may not necessarily be eligible for benefits unless they meet the specific definition of disability outlined in the policy.
Put into practical terms, the specific definition of disability in a policy can mean the difference between a claim being approved or denied, and thus has significant financial implications for the policyholder.
Breaking Down the Definition of Disability
Typically, a disability insurance policy defines ‘disability’ through the combination of several defined terms which must be read in conjunction with each other.
Substantial duties
You’ll likely see references in the policy document to ‘Substantial and Material Acts’ or ‘Material & Substantial Duties’ of the ‘occupation’ - this refers to the tasks, duties, and procedures that are required as part of your job. These are the core functions of your role, not the peripheral or occasional tasks.
Occupation
This reference to ‘occupation’ can vary between insurance companies - let's break this down into some variations:
- Own Occupation for a Specified Time: Under this definition, you're considered disabled if you're unable to perform the duties of your own occupation for a specified period. After this period, you may be considered disabled under an 'any occupation' definition.
- Own Occupation for Benefit Duration: This definition considers you disabled if you're unable to perform the duties of your own occupation for the entire duration of the policy's benefits.
- Own Occupation Based on American Board of Medical Specialties: This definition of disability is based on being ‘certified’ in a specialty or subspecialty recognized by the American Board of Medical Specialties (ABMS).
- Actual Procedures: This definition of disability is based on the specific duties you perform in your practice.
You can see that the differences in occupation are material. For example, you may see language such as: ‘Usual Occupation is not necessarily limited to the specific job that You performed for the employer.’
This is a red flag. Ideally, the policy should differentiate between the generic duties of the occupation and the job that the insured actually performs. The policy usually provides a benefit to the insured in the event of a disability that prevents them from doing the specific job that they were performing.
The Impact of a Narrow Definition of Disability
.png)
The reality is that a narrow or restrictive definition of disability can significantly limit payouts and, by extension, disadvantage potential claimants.
For instance, a policy with an 'any occupation' definition may provide benefits only if the insured is unable to work in any occupation for which they are reasonably suited by education, training, or experience.
This narrow definition of disability could make it difficult for well-educated professionals like physicians to qualify for benefits.
What definitions should Physicians and Medical Professionals look for?
Due to the highly specialized nature of a physician's job, it becomes more important for them to purchase the appropriate disability insurance policy.
The act of protecting a specific ability to earn is exactly what income protection insurance is designed for.
With that in mind, physicians should insist on the gold standard definition that protects them from a disability.
You should also expect to pay a little more for this type of coverage - but it’s undoubtedly worth it for the peace of mind that physician-specific coverage provides.
Hollowtree Can Help
Understanding the definition of disability in a policy is crucial for any physician considering disability insurance. It's also critical for HR and benefits departments to fully understand these definitions to support medical professionals in their organizations adequately.
While navigating the world of insurance can be daunting, with the right knowledge and guidance, you can confidently make the right decisions to protect your income and professional future. Remember, the definition of disability in your policy can significantly impact your eligibility for benefits, making it an essential factor to consider when choosing a policy.
Finally, always consider seeking advice from professional insurance advisers or financial planners who specialize in working with medical professionals. They can provide invaluable insights and guidance, helping you find the policy that best fits your needs.
.gif?table=block&id=13ecbef2-2e52-8174-b07a-ce4d1d61168a&cache=v2)