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The truth about “Own Occupation” for Residents

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The truth about “Own Occupation” for Residents
John Sealey, Insurance Consultant
When considering personal (individual) disability coverage, doctors are usually offered one of two definitions of “total disability”. The first, “Regular Occupation” means that you are considered to be totally disabled if you are unable to perform the essential duties of your “regular occupation” due to sickness or injury, under the care of a physician, and not otherwise gainfully employed. Your “regular occupation” is normally defined as the occupation you were engaged in at the time of disability. This means that if you can’t do your job due to a disability, you can stay home and collect benefits for as long as you are disabled. If you choose to work in a different occupation, and I emphasize the word “choose”, the insurer would take into account the income from that other occupation and prorate your benefits. For instance, a doctor whose previous net income totalled $120,000, becomes totally disabled in his occupation, but chooses to become a landscape gardener earning $40,000 per annum. He would suffer a loss of 66.66% of his predisability income. The insurer would then pay 66.66% of their total disability benefit.

In an "Own Occupation" definition, you are considered to be totally disabled if you are unable to perform the essential duties of your "regular occupation" due to sickness or injury and under the care of a physician. There are no restrictions on your earning income in another occupation, therefore so long as you couldn't perform the duties of your regular occupation but chose to earn income in another, your benefits would be unaffected.

 Note that the only difference between these two definitions is the treatment of income earned in another occupation, while unable to perform your own. The "regular occupation" definition will prorate benefits if income is earned in another occupation, while the "own occupation" definition will not.

 To qualify as "totally disabled" in your regular occupation, depends on your occupation. The person most likely to benefit from an "own occupation" rider is one whose duties are fairly physical. The no brainer example is the surgeon who loses two fingers on his dominant hand. He's out of the surgical business, but there are many other venues to pursue, should he so choose. In this case, he could collect his total disability benefits, retrain and perhaps earn as much in a different medical specialty as he was in his own.

 Not so the psychiatrist. If a disability prevented a psychiatrist from going to the office and sitting in a chair, there are very few other opportunities to pursue that would require less physical activity that could generate an alternate income. Family doctors are also an example. A disability that prevented a family doctor from performing all her essential duties would be hard pressed to find any other occupation that she could do.

Medical residents and the definition of "Regular Occupation"​​​

Now the rub. What is the "regular occupation" of a medical resident? According to insurers, a medical resident is a doctor in training and as such would only be considered totally disabled if unable to perform all the essential duties of a general resident. Note that insurers do not consider your "regular occupation" to be that of a surgical resident, anaesthesiology resident, or radiology resident. Your duties are those of a general resident or a doctor in training.

This interpretation is a definite eye opener for those who believed themselves to be covered in the speciality in which they are training. If a surgical resident were to lose two fingers, she would not enjoy the same definitions applied to her "regular occupation" that a practicing surgeon would. The surgical resident's regular occupation would be "doctor in training" and she would be expected to pursue a different medical specialty where the loss of two fingers would not be a hindrance. There would be no option of staying home and collecting benefits or taking advantage of an "own occupation" definition of disability and pursuing another career while continuing to collect benefits.

So what does this mean to a resident who is currently carrying an "own occupation" definition of Total Disability in their individual policy? Basically, if the sickness or injury that prevents you from pursuing one specialty doesn't prevent you from pursuing another, you would be expected to change specialties and would not be eligible for benefits. The fact that you have purchased this benefit assures you that, should your health change prior to the completion of your residency, you can still carry that definition with you into your specialty. The good news is that once you've completed your residency and are licensed to practice in your specialty, you enjoy all the benefits of the "own occupation" definition immediately.

Now insurance wouldn't be insurance if there wasn't a "but". A surgical resident who was two months away from completing his residency would most likely have a case that his "regular occupation" was far closer to being a surgical resident than just a medical resident. This would mean that a case could be made that the definitions of disability could be applied to the specialty, rather than just those of a general resident, but one shouldn't rely on this.​​​

The bottom line is that the only reason for carrying an "own occupation" definition of disability policy through residency is to ensure that it is there when you complete your residency. PAIRO's Essentials offer through the OMA, provides that you can purchase this benefit and many more once you have completed your residency, without providing any medical evidence. Your coverage is guaranteed to be issued. If having the "own occupation" definition of disability is your sole purpose for carrying private coverage throughout your residency, you might want to consider the Essentials option and save yourself some money.

​​Used with permission from John Sealey, Insurance Consultant.​​