Knowing How To Determine Your Eligibility for Disability Benefits

Disability insurance is a financial product designed to protect a person’s ability to earn an income. If an injury or illness prevents you from working, a Disability insurance policy will provide you with a monthly benefit to replace a percentage of your income. Disability coverage can normally be obtained both in your work place (premiums paid either by your employer or you), and also on an individual basis. Traditionally, insurance companies will provide up to 60% income replacement, but higher earners will be capped at a lower percentage of coverage.

One of the most important things to understand about Disability insurance is how an insurance company determines your eligibility for a claim. Insurance companies do not just look for specific types of illnesses or injuries and decide on eligibility. Instead they look at the affect an illness or injury has on a person’s ability to perform their job. If there is no negative impact, then a claim will not be paid, but if the illness or injury prevents a person from being able to work, then a claim is likely to be paid.

Insurance companies use three different definitions of disability to describe the circumstances in which a policy owner is eligible for a claim. Although every insurance company will use their own version, the concepts will remain the same. The three different definitions of total disability are:
The Pure Own-Occupation Definition of Total Disability – considers a claimant totally disabled if he/she is unable to perform the material and substantial duties of his/her occupation due to an injury or illness, even if gainfully employed in another occupation.
The Modified Own-Occupation Definition of Total Disability – considers a claimant totally disabled if he/she is unable to perform the material and substantial duties of his/her regular occupation due to an injury or illness, and cannot be gainfully employed elsewhere.
The Any-Occupation Definition of Total Disability – considers a claimant totally disabled if he/she is unable to perform any occupation for which he/she is or becomes reasonably fitted by education, training and experience and cannot be gainfully employed elsewhere.

This information will be available in either your actual Disability insurance contract or in a Disability insurance proposal illustration. It is important to fully understand the differences between these definitions since they describe the circumstances in which you are eligible for a claim. If possible, be sure to choose a policy that protects your specific occupation and not just any occupation. If you are only being offered Any-Occupation coverage, ask your agent to check for available riders that change it to Own-Occupation coverage.