By Nick Trawinski
Own Occupation Disability Insurance is invaluable to physicians. Three tiers of coverage exist. This article is to help physicians understand the three tiers for Disability Insurance coverage and which is best for them.
There are three tiers in the phrases ‘Own Occupation’ or ‘Own Specialty’ in the insurance industry. Many doctors end up with incorrect coverage because someone told them their plan was Own Occupation, withholding the explanation to them of the different tiers of coverage that exist.
The most critical piece of any disability insurance policy is the "Definition for Total Disability." This establishes when you are eligible to receive your benefit. As a result, this defines if you have “Own Occupation/Own Specialty” coverage, which then specifies which tier of coverage you have: Tier 1, Tier 2 or Tier 3.
Tier 3 provides a replacement of income if you cannot work in your medical specialty. The insurance carrier has a clause that allows them the ability to judge if you can continue to work based on your experience. This can include duties in occupations that the insurance carrier feels you may be capable of engaging in even with your disability.
Tier 3 is the least favorable disability option for physicians. It allows the insurance company to determine the future of your career. By withholding benefits and dictating what you're capable of.
Tier 3 Own Occupation Coverage is offered through some employers like hospitals or medical groups. Certain associations like the American Medical Association (AMA) will have this coverage.
Tier 2 replaces your income if you cannot work in your medical specialty. With Tier 2 Own Occupation coverage, the insurance carrier does not have the power to force you into a different occupation. Yet, if you elect to pursue another job, then your disability benefit will be reduced or eliminated based on income from your new occupation.
Tier 2 limits you from being able to continue your career in another occupation. Most physicians will try to work even if a disability prevents them from performing the duties of their medical specialty. While Tier 2 is more favorable than Tier 3, Tier 2 coverage still comes with restrictions that hinders your ability to remain in control of your financial future. Tier 2 Own Occupation Coverage is offered through most employer provided long term disability plans. Northwestern Mutual, UNUM, SunLife, ACOG, ACS, ACP, AAP also offer these plans.
Some Tier 1 companies like; Principal, MetLife, MassMutual, and The Standard have Tier 2 level Own Occupation Coverage. Again, check the definition of "Total Disability" in your policy.
Tier 1 coverage is the best Own Occupation coverage for physicians. Tier 1 Own Occupation coverage provides full coverage for physicians who are unable to work in their medical specialty. The insurance carrier does not have the power to force you into another occupation. They will never reduce or cut your coverage even if you elect to work in a different occupation, regardless of how much income you may earn.
See graphic below
When a physician says they want Own Occupation/Own Specialty disability insurance, they are referring to Tier 1 Coverage. Tier 1 coverage offers you the ability to replace your income if a sickness or injury prevents you from working in your medical specialty. While allowing you to remain in control of your career without penalizing you for earning another income. Tier 1 Own Occupation coverage can only be purchased privately. Which means it is not offered through your employer. Only 7 insurance carriers offer this coverage to physicians:
Ameritas – Guardian – MassMutual – Mutual of Omaha – Ohio National – Principal – & The Standard.
Nick Trawinski is the Principal Agent at InsuranceMD, an independent insurance agency working exclusively with physicians advocating that every physician has True Own Specialty Disability coverage. We provide physicians with quote comparisons from all 7 carriers, and we shop for any available discounts to ensure each physician is getting the best coverage at the best price.
We care about your disability insurance; you can request quotes here and schedule a call with one of our experienced agents to help you determine how much Own-Specialty coverage you qualify for at the best rate available. Visit InsuranceMD.com
