Own-Occupation Policy - Explained

What is an Own-Occupation Policy?

Updated at April 19th, 2024

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What is an Own-Occupation Policy?

An own-occupation insurance policy is a type of policy that covers individuals who suffered a disability during the period of employment. When an individual becomes disabled and is unable to carry out the tasks he or she was trained to perform, the own-occupation insurance policy provides coverage. This type of insurance policy allows an individual to claim disability insurance benefits and offers them protection from losing their means of income when they become disabled. Whether a disabled person is able to earn an income doing another job they are not trained for does not disqualify such person from the benefits of this insurance policy. For instance, when a driver becomes disabled in the legs, he can take up another job that does not require active use of legs and still earn an income.

There are some key points that should be noted in an own-occupation disability insurance policy. These are;

The term disabled or disability is defined in the insurance contract by different carriers, this term has flexible definitions.
A policyholder will only receive benefits if they are unable to work in their own occupation.
Whether a policyholder finds another job or occupation or not does not deprive them of the full benefit payments in an own-occupation policy.

What does an Own-Occupation Policy Cover?

An own-occupation insurance policy is otherwise called a "pure own-occupational policy." This policy protects an individual from losing their means of income because of a disability they suffered while on a particular job. In an own-occupation policy, a policyholder is entitled to a monthly benefit paid by the insurance carrier. Although own-occupation policies are more expensive than other forms of disability insurance policies, they offer more benefits. This policy only covers individuals that are working as at the time they become disabled.

Example of How Own-Occupation Policies Work

The illustration below will help you better understand how an own-occupation disability insurance policy works; Brandy is a professional typist that works with a reputable organization. As an own-occupation policyholder, if Brandy suffers a disability that made him lose his hands or finders, he is entitled to receive full benefits paid by the carrier of the policy. If Brandy thereafter takes up a job with another firm that does not require the use of fingers, he is still entitled to receive full benefits payment. An own-occupation disability insurance policy is only designed for individuals who suffer a disability during the period of employment.

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Own-Occupation Policy - Explained

What is an Own-Occupation Policy?

What does an Own-Occupation Policy Cover?

Example of How Own-Occupation Policies Work

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