A self-employment insurance policy covers people who become disabled and unable to perform the majority of the professional tasks for which they were trained. This type of insurance policy depends on the person employed at the time of disability. Personal occupation insurance policies are also known as “purely professional employment policies”.
Break the policy of personal occupation
When a personal occupation policy comes into force, the policyholder and the insurance company sign a contract stipulating that the insurance company will pay the policyholder a monthly benefit in the event of disability. But what determines a handicap? The key factor in a professional policy is the definition of the term “disabled” in an insurance contract. Since the definition of the self-employed is very flexible, people covered by a self-employed policy can find other employment and continue to receive full benefits.
Under the definition of disability insurance for individual occupation, a policyholder will receive benefits if you cannot work in your “own occupation”, whether or not you find employment in another occupation. This language will generally look like this: “You will be considered disabled if you are unable to perform the material and substantial tasks of your profession, even if you are employed in another profession.”
Sometimes, if a person is not working when they are disabled, they will not be able to claim insurance under a conventional self-employment policy. However, if they are covered by a modified professional policy, they will be. Under a modified policy, the definition of disabled includes people who are not working at the time of their disability. These types of insurance policies apply to highly qualified people, such as surgeons.
Example of how personal occupation policies work
Consider Mark, a surgeon who likes to do home improvement projects when he’s not in the operating room. One weekend, Mark’s hand slides over a saw and his finger needs to be amputated. Mark will no longer be able to perform surgery but may be able to work in another medical specialty or even in a profession outside the medical profession.
Under the definition of liberal insurance, Mark cannot exercise the important functions of his profession as a surgeon. If Jim had a disability insurance policy for his own work, he would receive full benefits whether he chose to work in another medical specialty or in another profession. This is why clean occupancy policies offer the greatest flexibility to policyholders and are of crucial importance to physicians.