Own-occupation disability insurance policies pay benefits to individuals who can’t continue their own specialized line of work. If you can’t perform all the activities of a demanding career, you won’t be denied disability benefits just because you can sell hot dogs at a football stadium.
In the past few years, claims had risen to unexpected levels so many insurers had cut back on “own-occ” policies. New policies might offer own-occ coverage for two or three years of a disability, after which a benefit reduction or elimination would be enforced if you’re able to do some type of work.
Now, true long-term own-occ is available again. You can buy policies from solid companies that will pay benefits until age 65, with an own-occ definition of disability, or even lifetime benefits. Moreover, own-occ coverage need not be that much more expensive than other disability insurance. If you compare an own-occ policy to a bare-bones, bottom-of-the-line policy, own-occ might cost an extra 25 percent.
However, if the comparison is to a solid policy that’s not own-occ but pays disability benefits based on lost income, you might wind up paying 5-6 percent more for own-occ coverage.
