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Own-Occupation disability insurance: are your expectations being met?

By David Simbro, Vice President – Northwestern Mutual

Most physicians have been told since residency that purchasing “Own-Occupation” disability insurance is critical to protecting the time and money they’ve invested in their chosen profession. And most medical professionals have considered at length what would happen to them, their incomes, their families and their careers if they suddenly found themselves injured or ill. For many, the answer is complicated and the stakes are as high as the income at risk.

However, despite physicians’ best intentions and preparation, recent research conducted by Harris Interactive[1] suggests that there are great discrepancies between what own-occupation coverage really is and what physicians expect of it. In fact, after numerous face-to-face interviews with physicians in cities across the country, the research found that most physicians are unaware of the stipulations of their own contracts – stipulations that significantly impact the type of benefits they may receive at the time of claim.

In medicine and in risk protection, knowledge is power and preparation is key. The following discussion will help shed some light on how own-occupation policies actually work, help align expectations with what the contracts actually provide, and empower physicians to purchase a policy that will protect their livelihood when it matters most.

Breaking down the essentials

For the purpose of this discussion, we will concentrate on examples based upon a generic own-occupation definition. Every policy has language unique to the issuing company, but the basic premise is the same:

The insured is totally disabled if, because of injury or sickness, he/she is unable to perform the material and substantial duties of his/her regular occupation.

According to the Harris research, physicians share several common misunderstandings about three key concepts that comprise this premise: “material and substantial duties,” “regular occupation,” and “totally disabled.” Additionally, most physicians were unclear about the distinctions between own-occupation definitions, i.e., “modified,” “pure” “specialty.”

What follows is a closer look at these crucial concepts, what they mean, common misconceptions, and the fine-print implications.

Material and substantial duties

In plain English: These duties are the tasks that you perform regularly, that generate income, or that are directly related to the duties that generate income.

Physicians’ take: A large portion of the physicians who participated in the research were concerned about the vague definition of this term. What exactly falls within the parameters of “material and substantial”?

The fine print: Most physicians, especially specialty physicians, have multiple material and substantial duties (e.g., surgery, diagnostic, non-surgical treatment, etc.). In fact, only one physician in the Harris study performed surgery as their one and only duty. It’s up to the insurance company administering any given claim to decide what constitutes a material and substantial duty – physicians have no control over how their duties are defined.

Regular occupation

In plain English: In virtually any type of own-occupation policy, “regular occupation” is the specific occupation you are in at the time a disability starts (for example, neurosurgery, obstetrics, pediatrics, etc.), regardless of whether your job is considered a “specialty” or not.

Physicians’ take: The Harris study found that most physicians did not fully understand what constitutes a “regular occupation.” Some thought it was a broad definition (i.e., being a “physician” in general versus having a particular specialty), others assumed it was specialty-based, and still others thought it referred to post-disability occupations.

The fine print: An important technicality to understand is that “regular occupation” does not refer to being a “doctor” in the broad sense, nor does it have anything to do with occupations post-disability. It is your specific occupation at the time of disability.

An even more critical caveat to be aware of is that “regular occupation” does not refer to the duties you have at the time you purchase the disability policy. It protects you relative to the duties of your occupation at the time of injury or illness. In other words, if your duties change after purchasing your policy, the disability scenario and coverage you envisioned at the time of purchase may no longer apply.

Totally disabled

In plain English: If you can do even some of your principal duties, you would not be considered totally disabled. You would have to be incapable of performing all principal duties related to your regular occupation to be considered totally disabled, and thus receive the resulting benefits. Take a look at some examples in practice:

Type of practitioner

Principal duties pre-disability

Post-disability capabilities

Likely status under all own-occupation definitions

Family practice

Patient care (100% of duties and income) Unable to examine, diagnose, and treat patients

Totally disabled


Patient care (100% of duties and income) Able to work only 2 days a week due to an accident or illness

Partially disabled


  • Surgery (70% of duties and income)
  • Unable to perform surgery
  • Able to examine, diagnose, and treat patients in the office

Partially disabled

  • Patient office visits (30% of duties and income)

Physicians’ take: Nearly all of the physicians participating in the Harris study were shocked to realize that they would have to be unable to do all of the principal duties related to their occupation – not just their primary duty – to be considered totally disabled at the time of the claim.

The fine print: What’s significant here is that all “own-occupation” definitions look at duties, not specialties or titles (e.g., surgeon, etc.), when determining eligibility for total or partial benefits. And it is the insurance company – not you – that will be assessing what your “duties” involve.

Additionally, be aware that if at the time of your claim you’re considered partially disabled, you will have to be working in order to receive partial benefits.

Own-occupation definitions – what is my benefit?

In plain English: The material differences between the three definitions of own-occupation come into play only if you are deemed totally disabled. At that stage, the various definitions determine the benefit amount you’re eligible for, particularly in the context of whether you choose to work in a different occupation. For example:


If you are unable to work in a different occupation…

If you are able to work in a different occupation but choose not to work…

If you are able to work in a different occupation and choose to work…

Modified Own-Occupation

  • You receive your full disability benefit.
  • You receive your full disability benefit.
  • You can earn up to 20%* of your pre-disability income and still receive your full disability benefit.
  • If you earn more than 20%* of your pre-disability income, you receive a proportionately reduced benefit.

Pure Own-Occupation


Specialty Own-Occupation

  • You receive your full disability benefit.
  • You receive your full disability benefit.
  • You receive your full disability benefit.

*Percentage of income may vary by insurer

Physicians’ take: Most physicians didn’t realize how slight the difference in definitions is, and did not understand that it was their choice – once deemed fully disabled – whether to work in a new occupation.

The fine print: Should you become totally disabled from performing your regular occupation, it’s completely up to you whether you assume a new one. Weigh your options and realistically evaluate how important and relevant the differences are to your particular circumstances.

David Simbro is Vice President, Northwestern Mutual.  Visit www.northwesternutual.com to learn more about disability insurance and how it fits into your financial security plan.

[1] Conducted in partnership with Northwestern Mutual Life Insurance Company, Milwaukee, WI, the Harris Interactive research involved focus-group discussions in four major metropolitan areas – Philadelphia, Chicago, Nashville, and Baltimore – in the spring of 2008. Over 60 physicians participated, with specialties ranging from surgery, obstetrics, urology, neurology, cardiology, internal medicine, pediatrics, et al. Researchers shared facts about disability insurance claims administration and actual “own occupation” definitions of disability, and walked through scenarios showing how the definitions were applied in various disability situations. The participating physicians then shared their impressions in light of those facts.


  1. If a surgeon is unable to operate, but then picks up another job earning half as much, The NM modified own occ will still pay a benefit proportionate to the loss of income. This gets the individual’s income back to normal. True “Own Occupation” is different because it allows people to double dip. If the surgeon becomes a corporate Lawyer making an equal income, why would he need a policy to pay out 100% of the benefit on top of his salary? If it cost the same as NM’s modified own occ, that would be great. But it’s much more expensive.

  2. Brad,

    Northwestern does not have the best policy on the market for physicians and to say that is misleading. They have medical specialty language but they do not offer a true own-occupation policy. It is a modified “own-occ” contract.

    This means that if you were to become disabled in your medical specialty you would receive full benefits, however if you choose to work in another occupation or medical specialty (surgeon who decides he can work as a pathologist or family practitioner) you would no longer be eligible for benefits.

    There are at least 4 different carriers that would continue to pay you full benefits if you fell under this type of disability. How can NML claim to have the best policy for physicians when Guardian/Berkshire has a true “own-occupation” policy and medical specialty language? Also most physicians would not have a 2 year limitation on Mental/Nervous claims. Northwestern will limit all mental/nervous claims to 2 year max.

    There are so many other differences and if you were to do a side by side comparison with your clients you would see the facts for what they are.

    It is irresponsible to post comments like that.

  3. Brad,

    You are correct that Northwestern has own occ disability, but it is modified occupation not true own occupation. In short, with Northwestern if you are at work in ANY occupation you are not totally disabled. A Surgeon who cannot perform surgery but is a janitor is not totally disabled. With True own occupaion if a Surgeon cannot perform surgery but decides to become a lawer he is still totally disabled no matter how much he works in another occupaiton or how much money he makes. Cannot perform surgery = totally disabled no matter what.

  4. Joseph,

    Sorry, but that is false. Northwestern Mutual not only has own occ disability, they have medical marketplace specific disability insurance. They have the best contract in the medical marketplace currently. Mr. Simbro is telling you to examine your employment contract as well as your disability contract, as the contract language of both is very confusing. All own occ definitions are not the same from company to company.

  5. Perhaps the reason you are not promoting own occupation is because Northwestern Mutual doesn’t have it. I am a physician who was injured and couldn’t perform surgery. Thank goodness I had an own occupation policy. If I would have taken the Northwestern Mutual policy I would have been screwed!

  6. Whatever you do, do not buy occupational specific disability insurance from Unum Provident. I was totally screwed by them back in 2000. As a newly graduated Anesthesilogist from the University of Michigan I became very ill. They denied a very legitimate claim and they knew I was in no position to fight them. They had no problem accepting my premium dues, however, when I really needed them, they completely abandoned me.

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