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When it comes to you and your disability insurance, words matter. Specifically the policy language that defines your occupation. How this part of the policy is worded can make the difference between the insurance company paying you during a disability, or leaving you high and dry on a technicality.

In this episode, Billy discusses how this definition should be worded and common pitfalls that doctors like you need to be aware of when it comes to disability insurance.

Highlights from this episode include:

  • Why the wrong occupational definition could bankrupt you and your family (1:46)
  • How to continue earning a living, even when you can’t practice your specialty… And still  keep your insurance benefits (2:41)
  • Is the policy provided by your employer good enough? Not if it doesn’t have this specific feature (3:12)
  • The commonly misunderstood emotional cost of disability and how to protect yourself from mental breakdown (4:45)
  • If your policy has this common definition of your occupation, you’re heading for financial ruin (5:34)
Read Full Transcript

Hi, I'm Billy Gwaltney and this is the CYA podcast. This show is for the physician who understands the importance of protecting everything you've worked so hard to achieve. Each week I'll bring you tips and advice to help you cut through the clutter and misinformation and show you exactly what you need to preserve your income and way of life. If you're ready to achieve the peace of mind that only financial security can bring. Let's get started.

Welcome to episode three. The title of today's show is what is the specialty own occupation definition of disability when it comes to physicians and their disability insurance. Today I'm going to summarize that definition, go into a little more detail about the pitfalls that you want to be careful about and then summarize it at the end. So first, the true specialty on occupation, definition of disability. I say true specialty because there are different variations of what insurance companies and other folks call specialty occupation coverage, and I'm going to try to cover some of that today, but a true specialty own occupation, definition of disability means two things.

01:14 One is you're totally disabled if due to illness or injury, you are not able to perform the material and substantial duties of your occupation and your occupation can be an AMA recognized specialty or subspecialty that you've trained for. So if you can't perform your specialty or subspecialty, then you're considered to be totally disabled. The second part of that definition is also very important and that says that there's no penalty while your own claim for earning income in a different occupation. Okay, so you're disabled from your specialty. You could then go engage on a different occupation, teach at a medical school, run a practice, write a book, do something in medicine or outside of medicine and earn an unlimited income doing that and there would be no impact or reduction in your disability benefit the way one of the top insurance companies words, their definition of disability is this way, and I'm just going to read it to you.

02:10 A total disability means that solely due to sickness or injury, you are not able to perform the material and substantial duties of your occupation. If you are a physician or dentist and have limited your duties to the performance of the usual and customary functions of a specific professionally recognized medical or dental specialty, we will consider that specialty you are occupation. So if you can't do that occupation, that specialty, you're disabled, you can then go engage in a different occupation and there would be no penalty to your disability benefit. That is the true specialty own occupation definition of disability as at the time of this podcast, there are four companies that would be go-tos for this definition and that's it. The universe is really small. You want to make sure you get that correct there. Variations of this definition get muddy very fast. One of those is what's called a modified own occupation definition of disability, and we see this sometimes in employer policies and in other policies outside of the four and what that says is you're disabled if you can't do your specialty and as long as you're not working in a different occupation.

03:21 So if you are disabled from your specialty, if you ever earn income from a different source and depending on the insurance company, this could be rental income. It could be, it could be any other earned income. If you have that earned income come in, then it would reduce your disability benefit and potentially eliminate it. It's very important that you make sure that there's not a what's called an own occupation and not working definition in your policy. You definitely want to be able to engage in a different occupation. The reason that's important is because most disabilities are not catastrophic. The reason this true specialty definition is so, so vital is that it's very possible to be highly trained to do something as a physician, be unable to do that, say due to a herniated disc in your back and you can't get to work and still be just as sharp, just as motivated, just as engaged in contributing to society and being paid fairly for that as you were before you were disabled.

04:24 I mean, you know, you, if you're disabled in your thirties or your forties you've got a lot of life left to live and so there, there can be opportunities that come up and at least having the freedom to decide on your own whether or not you want to do those things is really important. It's important not only financially but it's also important emotionally. Unfortunately we do have clients that are on claim, we have clients that earn money doing other things and then just having the freedom to do it to say yes or no, they don't have to do it. You don't have to engage in another occupation, but you can if you want to and it not impacting your disability coverage or, or just messing that up in any way is just a vital asset to have. And if you do it right, you can get that in there and you're not going to pay dramatically if any more in premium than you would for a lesser definition.

05:12 Especially if you purchase this as a trainee and you take advantage of discounts. Even if you're an attending, we can get discounts and so doing it right does not mean that you have to break the bank to do that. There's another definition that is probably the least favorable and that's what's called an any occupation definition of disability. This is essentially the social security definition. A lot of group LTD policies have this. They'll, they'll start out with a, with an own occupation and not working definition for a small period of time and then it will transition. Say after a two year benefit period, it'll go, it'll switch over to any occupation definition or after five years it'll switch to any occupation. What this basically means is isn't if there's any occupation you can engage in based on your education, based on your experience, then they would require you to engage in that occupation and they would reduce your disability benefit potentially, even if you didn't choose to do it, so they're going to count that against you regardless of whether or not you actually go do it.

06:13 Again, a lot of group policies have that definition and it's the least favorable one I would cover for catastrophic disabilities, but again, most disabilities are not catastrophic in order to get the true specialty definition of disability. An important consideration is to realize that it typically does require medical underwriting approval and so employer policies by default group LTD, which LTD means long term disability or even employee supplemental policies often and usually do not contain the true specialty definition where you would not be penalized if you earn money in a different occupation. The reason is because usually medical underwriting is not required for those policies and that employer is required to issue the policy on all their employees that are in that group regardless of their health. So the unhealthy are covered with the same policy as the healthy and anytime that happens, insurance companies understand that their risk pool is a lot less favorable to them and to offset that additional risk, they just make it more difficult for everyone to collect benefits.

07:22 And so your group disability policy, even if your benefits person tells you that it's what's called specialty specific or there are all kinds of wordsmith smithing games that group disability insurance companies use to make it sound as good as possible. Those definitions are not going to be comparable to a private, well-designed, properly designed specialty disability policy with one of the top carriers where you have to go through medical underwriting to get it. So the question becomes, well, what if you can't qualify from a medical underwriting standpoint, then obviously it's advisable to consider all options. All options are on the table. But it's important to understand that the true specialty definition that we're talking about is not the fault of the employer, that they can't offer this, but it's generally not available in an employer setting because of that adverse selection and covering everyone with the same policy.

08:19 Okay. So in summary, the true specialty definition of disability essentially means two things. One, you're disabled. If you cannot perform the material duties of your specialty or subspecialty. Two, you are not penalized for any income. You later earn in a different occupation. Having that definition will serve you very well and if you are disabled and unable to do your job, then you can count on that policy performing as you expect it to perform. If you would like to discuss your specific situation with me, if you have any questions I'm to answer those, feel free to text me anytime to arrange a conversation or talk further. My number is (704) 270-2376 again, (704) 270-2376 I'd be happy to get in chat with you further if helpful. Until next time we will see you later. Thank you for your time. I'm always grateful for that.

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