How to Understand Your Long Term Disability Policy’s Definition of "Disability"

Every long term disability policy defines what the term “Disabled” or “Disability” means.  You must meet the definition to be eligible for benefits.  If you don’t understand your policy’s definition of disability, you could substantially hurt your chances of claim approval or continuation of benefits. Learn how to understand the applicable definition of disability in your long term disability policy by reading the helpful information below.

Find Your Policy’s Definition of Disability

You can usually find your policy’s definition of disability in one of the following sections:

• Definitions Section
• Schedule of Benefits
• Certificate of Insurance
• Description of Benefits

Know the 3 Common Types of Definitions

There are typically only three types of definitions found in long term disability policies:

• Own Occupation
• Any Occupation
• Hybrids

Each of these terms will be explained in detail below.

The “Own Occupation” Definition

Under the “Own Occupation” definition of disability, you only need to prove you cannot perform the essential duties of your own occupation – meaning the occupation you were performing when you became disabled.  This definition may also be called “Regular Occupation.”

This definition is the easiest to meet because you don’t need to be totally disabled from all jobs to receive benefits – only you own occupation.  This burden can still be difficult to meet, but it is still the easiest to satisfy out of the three definitions typically seen in long term disability policies.

Sample:

Definition of Disability/Disabled:

The Employee is considered Disabled if, solely because of Injury or Sickness, he or she is:

1. unable to perform the material duties of his or her Regular Occupation; and
2. unable to earn 80% or more of his or her Indexed Earnings from working in his or her Regular Occupation.

Note that this sample definition also contains an earnings requirement.  In this example, you must also be unable to earn 80% or more of your prior earnings. 

The “Any Occupation” Definition

Under the “Any Occupation” definition of disability, you must prove you cannot perform any occupation you are, or may become, qualified for based on your education, training, and experience.

This is a more difficult standard to meet.  You need to prove not only that you cannot perform the duties of your own occupation, but you also cannot perform the duties of any other reasonable occupation. 

Although you may not be able to perform your own occupation, the insurance company may identify another occupation you could perform just to deny benefits.  In doing this, the insurance company may pick a new occupation that is inappropriate based on your education, training, and experience.  This can result in wrongful denial or termination of your long term disability benefits.

Sample:

Definition of Disability/Disabled:

The Employee is considered Disabled if, solely because of Injury or Sickness, he or she is:

1. unable to perform the material duties of any occupation for which he or she is, or could reasonably become, qualified based on education, training or experience; and
2. unable to earn 80% or more of his or her Indexed Earnings.

Note that this sample definition also contains an earnings requirement.  In this example, you must also be unable to earn 80% or more of your prior earnings. 

The “Hybrid” Definition

A Hybrid definition of disability combines aspects of both the “Own Occupation” and “Any Occupation” definitions.  If your policy contains a hybrid definition, you generally must prove you cannot perform your Own Occupation for a specific period time (typically 24 months), after which you must prove you cannot perform Any Occupation. 

If your policy has a hybrid definition of disability, it is extremely important to be aware of when the applicable definition of disability shifts (again, usually 24 months).  Before the shift occurs, the insurance company will re-review your file when to determine whether you are still disabled under the new applicable definition.  Insurance companies will often terminate long term disability benefits when the shift occurs.

Sample:

Definition of Disability/Disabled:

The Employee is considered Disabled if, solely because of Injury or Sickness, he or she is:

1. unable to perform the material duties of his or her Regular Occupation; and
2. unable to earn 80% or more of his or her Indexed Earnings from working in his or her Regular Occupation.

After Disability Benefits have been payable for 24 months, the Employee is considered Disabled if, solely due to Injury or Sickness, he or she is:

1. unable to perform the material duties of any occupation for which he or she is, or could reasonably become, qualified based on education, training or experience; and
2. unable to earn 80% or more of his or her Indexed Earnings.

In this example, you must be unable to perform your Own Occupation and be unable to earn 80% or more of your prior earnings for the first 24 months of disability.  After that, the shift occurs – you must be unable to perform Any Occupation for which you are, or could reasonably become, qualified based on your education, training or experience, plus you must be incapable of earnings more than 80% of your prior earnings.  A few months before the first 24 months passes, the insurance company will conduct a thorough review of your claim to see if it should terminate benefits.

There are a few things you can do to avoid benefit termination when the shift occurs.  Depending of the facts of your case, some options may include:

• Getting a statement from your doctor explaining why you cannot perform any occupation;

• Undergoing a Functional Capacity Evaluation, which can measure your physical ability to perform Any Occupation;

• Undergoing a Neuropsychological Evaluation, which can measure your cognitive and mental ability to perform Any Occupation; and

• Obtaining a Vocational Assessment, which can explain your occupational and educational background to address whether you could perform Any Occupation in light of your medical restrictions and limitations.

This list is not exhaustive.  If you’re about to undergo a shift in the definition of disability, it is a good idea to talk to a lawyer about the best way to protect your ongoing benefits.