wording in an employer policy

[turtlerock]

After 60 months, the physician qualifies for benefits if unable to perform all the material
duties of any occupation for which the physician may reasonably become qualified based
on education, training, or experience, or if unable to earn more than 80% of indexed
covered earnings.

 

Can anyone comment on the practical implications of this? a lot of policies have own occupation clauses that are only for 2-5 years and then it switches to any ocupation. How well does the 80% wording work in protecting you? Obviously a walmart greeter won't make 80% of a partners physician salary. I'm just curious if anyone has any experience on this.

[Scott at MD Financial Services]

Certainly less than ideal with the language of "ALL of the material duties of ANY occupation" but better than nothing...

Depending on exactly what the policy states the residual might end up being boiled down to % of income lost is % of income paid.  If you earn less than 20% of your pre-disability income then you get 100% of the benefit, if you earn more than 80% of your pre-disability income then you get 0% of your benefit.  Typically those contracts will go on to say "after 24 months of earning greater than 20% of your pre-disability income post that disability now that new occupation will be deemed your occupation and benefit will cease".  What that typically means is if you work post the 60 month clause (the defined own occupation period) earning greater than 20% of your pre-disability income then after 24 months that is your new occupation and no benefits will be paid.

The question I would have is "what is your specialty"?  The more highly refined your specialty is the easier it is for one to become disabled.  An example would be a surgeon that has major nerve damage to their thumb on their dominant hand might be out of their occupation but that same injury or issue to a psychiatrist probably did not disable them.  It is important to understand your occupational risk and purchase what fits since there is typically a 15-20% price swing based on how you design your policy.

I always believe in really talking through with my clients what exposures one has and what do they really want to insure against, the answer is simply not the same for everyone.