Own Occupation
What Does Own Occupation Mean?
“Own occupation” is a type of total disability insurance that provides benefits to the insured if they can no longer perform the job for which they are qualified and hired. The terms of coverage may vary depending on the specific insurance policy purchased. That variation is why own occupation is one of the more important wording checks to make when shopping for disability insurance, since a stricter definition can affect whether a claim actually gets paid.
Insuranceopedia Explains Own Occupation
There are three types of own occupation policies:
- True own occupation: This policy pays the benefit in full, even if the insured takes another job after incurring the disability.
- Transitional own occupation: This policy pays benefits if the insured finds work after the disability, covering the gap between the total benefit and the post-disability salary. For example, if the maximum benefit is $6,000 and the salary after disability is $4,000, the insurer will provide $2,000 to the insured.
- Own occupation, not engaged: This policy pays benefits to the insured only if they are not working after the onset of the disability. If they find a job, the insurer will not pay the benefit.
Which of these three versions a policy uses affects both the premium and how much income replacement you actually receive, so it’s worth weighing alongside the other factors involved in choosing the right life insurance policy if you’re adding disability coverage as a rider.
