Own-Occupation Policy

What it is

An own-occupation disability insurance policy pays benefits when a policyholder is unable to perform the material and substantial duties of the occupation for which they are trained. Coverage is typically triggered by inability to perform one’s own occupation—even if the person can work in another job or profession.

Doctors and other highly trained professionals often buy own-occupation policies because loss of specialized skills can destroy their primary earning capacity even though they could be employed elsewhere.

How it works

• The policyholder and insurer sign a contract that promises monthly disability benefits if the insured becomes disabled under the policy’s definition.
• The critical element is the contract’s definition of “disabled.” Under a true own-occupation definition, you are disabled if you cannot perform the material and substantial duties of your own occupation, regardless of whether you are working in another occupation.
• A typical policy clause might read: “You will be considered disabled if you are unable to perform the material and substantial duties of your occupation, even if you are gainfully employed in another occupation.”

Modified own-occupation vs. pure own-occupation

• Pure (or “true”) own-occupation: Covers individuals who are employed at the time of disablement and defines disability strictly by inability to perform your own occupation.
• Modified own-occupation: Expands coverage to people who were not working at the time they became disabled. This type is often used for highly trained professionals (e.g., surgeons) who need broader protection.

Example

A surgeon injures a hand and can no longer perform surgeries. Under a pure own-occupation policy, the surgeon would receive full disability benefits because they cannot carry out the material duties of their surgical occupation—even if they later work in another medical specialty or a different field.

Key considerations when evaluating a policy

• Definition of “disabled”: The single most important factor—read the exact wording.
• Employment requirement: Check whether you must be actively employed when the disability occurs.
• Benefit structure: Elimination period (waiting time before benefits start), benefit period (how long benefits are paid), and monthly benefit amount.
• Partial or residual benefits: Whether the policy pays partial benefits if you can work but at reduced capacity or income.
• Cost: Own-occupation policies, especially true own-occupation, are generally more expensive than broader “any-occupation” policies because they are more generous.

Own-occupation vs. any-occupation

• Own-occupation: Pays if you cannot perform your trained occupation, regardless of other work.
• Any-occupation: Pays only if you cannot perform any gainful occupation for which you are reasonably suited by education, training, or experience. This is narrower and harder to qualify for.

Bottom line

Own-occupation disability insurance protects the income of professionals whose jobs require specialized skills. Evaluate the exact disability definition, employment requirements, benefit terms, and cost to determine whether true own-occupation or a modified version best fits your needs.