What Is Own Occupation Disability Insurance, and Why Does It Matter?
- Nisha Mehta, MD
- Jun 16
- 7 min read
We often talk about how your income is your greatest asset for building wealth and reaching financial independence, allowing you to practice medicine on your terms. You’re likely familiar with disability insurance, as it’s a staple in physician finances to protect the financial security that you’ve worked so hard to build. That said, it can be confusing to understand the different types of disability insurance policies and the various disability insurance riders. We often get questions in our online physician community about whether it’s important to have an own-occupation policy, especially if they already have a policy through their employer. Below, we dig into why own-occupation disability insurance is so important for doctors, and why they should examine policies to see if they really offer true own-occupation DI when shopping for disability insurance.
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Types of long-term disability insurance
When we typically discuss disability insurance, including own-occupation disability policies, we’re referring to long-term disability insurance. We’ve discussed what to know when considering a short-term disability insurance policy separately.
For long-term disability insurance, there are two primary classifications: any-occupation and own-occupation coverage.
An any-occupation disability insurance policy pays you if you are unable to work any type of job due to your disability. While on the surface, this might seem ideal, that’s a caveat: many of these types of policies don’t pay out if you’re capable of doing any type of work at all, even if that type of work has nothing to do with your medical training or specialty and doesn’t provide anywhere near your physician salary. As such, any-occupation disability insurance is typically less expensive, but also provides less coverage. This can leave you with a significantly decreased income in a season of life when you need steady income the most.
Note: some employer sponsored plans are this type of disability insurance policy.
An own-occupation disability insurance policy pays you even if you are able to go back to work in some limited or different capacity/role or find new work at another job, as long as you are unable to return to your original job in the same way as you were able to prior to the injury or diagnosis. This is a critical distinction that is important for high-income earners, who are often capable of performing other jobs, but that pay significantly less than what they make at their current position.
Both are long-term disability insurance policies, but the definition of what qualifies as a disability, and thus what situations qualify you for benefits under coverage, are different. With own-occupation, the definition of what qualifies as a disability is much broader.
Types of own-occupation disability insurance
Along with distinctions between own-occupation and any-occupation, there are different types of own-occupation disability insurance, as again the definition of disability can be further restricted.
True own occupation disability: Your policy will pay if you cannot work in your specialty/occupation, even if you work in another field and regardless of how much you make at your replacement work.
Transitional own occupation disability: these policies will pay if you cannot work in your specialty/occupation, but only if you don’t exceed your previous income. If you end up working in another field that pays the same or more, your monthly benefit can be lowered.
Modified own occupation disability: these policies only pay you a benefit if you cannot work in your specialty/occupation and if you aren’t working in another field.
True own occupation policies offer the broadest coverage, and thus are generally what we recommend for most doctors.
Why is true own-occupation so important for doctors?
As you know, you’ve invested countless years and likely hundreds of thousands of dollars into becoming a highly trained and skilled expert in your specific medical field. For many physicians, this expertise doesn’t always readily transfer to other jobs, especially jobs that reliably pay as much as your clinical salary. For example, you may be able to take a nonclinical job if you were disabled, but it’s unlikely to pay similarly to your clinical physician job. As a more concrete example, if you’re a surgeon who develops a condition that makes it difficult to do large cases, you may be able to still perform minor procedures, teach, or do chart review, but this income likely wouldn’t come close to what you previously generated.
With an any-occupation policy, you wouldn’t receive any benefit payout in this situation. With true own-occupation coverage, you would receive policy benefits. This can help maintain your current lifestyle, keep you on track for your retirement goals, and help cover any additional medical expenses incurred from the related disability. An intangible benefit is the peace of mind, knowing you don’t have to stress about covering your financial obligations.
Where can I get an own-occupation disability insurance policy?
We have partnered with independent insurance agents who can help you shop true own occupation policies across the major insurance companies that offer these types of plans. It doesn’t cost you anything to use them (they receive their payments from the insurance company you ultimately pick), and they can help guide you through the process, including finding available discounts, explaining the available disability insurance riders, and pointing out any potential red flags that may cause you to get declined for a disability policy.
Thousands of our members have used and said positive things about our sponsors at:
Pattern. This convenient option will allow you to enter your information and immediately begin generating quotes from the major disability companies, as well as schedule a meeting with the Pattern team to discuss the options and figure out which plan is best for you. Many in the group have had a great experience with this process. Contact them here.
Moment Insurance: Complete your quote inquiry information in less than five minutes and easily schedule an appointment to speak with a dedicated, experienced disability insurance expert who will walk you through the process from start to finish and help you compare different options. Many in the group have worked with their experts previously, and had a great experience! Contact them here.
PolicyGenius: This is not a physician specific company, but well known in the insurance space. They may be a helpful resource if you are looking for another place for quotes. Make sure that you're comparing apples to apples in terms of true own occupation insurance, as not all fields emphasize the need for this equally. Contact them here.
Tips when applying for true own occupation disability insurance
A few general tips for physicians exploring own-occupation disability insurance coverage for the first time:
Get your new policy in place before cancelling any existing policies, such as an any-occupation policy, to ensure you don’t run into any unexpected hiccups during the application and underwriting process
Make sure your policy is a true own occupation policy, and not a modified version as discussed above
It’s important that you specify for your policy what your specialty is; to make the most of your own-occupation coverage, you don’t want your occupation to simply be labeled as “physician”
Evaluate common disability insurance riders to see if there are any you’ll want included as part of your policy
Apply as early as possible, ideally in residency or fellowship (this can offer significant trainee discounts, as well as protect you from developing an interim issue that causes your premiums to be higher or precludes you from getting coverage)
Work with an independent disability broker/agent who can guide you through the process and compare best plan options
Share all information with your disability agent when shopping policies, even medical issues that seem irrelevant, as you don’t want something to cause a denial; having a denial on your record can make it difficult to secure a policy now or in the future
Make sure you understand how premiums work before finalizing your policy; learn more about guaranteed renewable and non-cancellable, as well as the differences between graded vs level premiums
Conclusion
While an any-occupation policy can be cheaper than an own occupation policy, it typically doesn’t adequately protect your physician income from the threats caused by situations where you are not completely disabled from working in any capacity whatsoever. Some employer sponsored policies can be any occupation, so you should be careful about relying on these as your sole source of income (along with other reasons why it’s not advisable to only have employer sponsored disability insurance). Own-occupation disability insurance can help you maintain your lifestyle and your earnings potential for your specific specialty. True own-occupation coverage is what most physicians will want, until they reach financial independence and work becomes optional.
While own-occupation policies are more expensive, securing a policy sooner rather than waiting can help you qualify for better rates. We highly recommend contacting an insurance broker used to working with physicians and buying a disability policy as early as possible after graduating medical school, as you often qualify for additional discounts during training and premiums are often lower when you’re younger, plus you’ll avoid a situation where interim medical history increases premiums or even precludes you from getting a policy.
Additional disability insurance resources for physicians
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