As you know, I’m a personal injury attorney in New Orleans, and one of the things I’ve come across many times over the years is disability insurance. 

What Is Disability Insurance?

What exactly is disability insurance? If you are working and you are injured in some fashion, whether it’s through another person’s fault or not, and you can no longer work, then this policy pays you a sum of money while you’re disabled. So, there are a couple of factors that are very important to know about disability insurance.

The Amount Of Coverage

The first thing you need to know is the amount of the coverage payment should you have to make a claim. And you always want to make that payment equal to what your current income is, after taxes. 

So whatever your net income would be that you normally live on, you want the coverage payment to match it. Now as your income level increases or decreases, you can change the policy from year to year. That’s not a big deal.

The Definition Of Disability

The second factor is the biggest factor, and it’s really where the rubber meets the road. It’s called the definition of disability. 

So when you’re going to buy a policy, it’s always very important to look at an example of that policy and specifically at the definition section. That’s the way insurance policies are written. 

They have definitions that will apply to the policy itself. And then it will also give all the provisions, what’s covered, what’s excluded, and things like that. But in that very first section of definitions, it’s going to say “Definition of Disability.” This is huge.

The Problem With Cheaper Policies

Cheaper policies define disability to mean that you can’t work at all. In many cases, this is not going to be the case. So, for example, if you are a mechanic at a car dealership, and you could theoretically go flip hamburgers, then that definition of disability will not be met and you will be excluded from any sort of claim. 

And if that’s the case, it can be very tragic for you and your family because you’re going to go from a very high-income level to very little or even no coverage.

Why You Should Consider An Own Occ Policy

So what you want to do, especially if you have any specialized training or you’re highly educated, and perhaps have a graduate degree, for example, a Ph.D., you want to get what’s called an Own Occ policy. 

This essentially means that the definition of disability will read that if you cannot perform the essential functions of the job for which you were educated and trained, then the disability provision provides coverage. This will leave you in a much better situation. 

The bad part about that is that since those policies are going to be made payable a lot more often, the premiums for those are going to be higher.

Now I know everyone looks at insurance as a big soccer bet, but if you need it, it’s good to have it in place. So if you have any questions, please give me a call or email me at chip@cosselaw.com.