The Own-Occupation period is the foundation on all Principal policies. You always want to match the occupation period with your benefit period. The definition of the Own-Occupation period is: “You must be unable to perform the substantial and material duties of your occupation and not working.” This is the definition on all policies and, in essence, protects you in your specific occupation as you would receive full benefit if you are unable to work and do your job.
I always like to stress that the Own-Occupation period is on all Principal policies and when you add additional riders onto the policy, it then adds additional strength to the policy.
The Residual Rider adds strength to your policy if you are partially disabled and have at least a 20% loss of income. It would then pay the percentage of loss from the disability. This would pay out in your current occupation or if you worked in another occupation (and didn’t have the Regular or Transitional Occupation Rider).
The policies that include either the Regular Occupation Rider or Transitional Occupation Rider also adds strength to the disability policy. These two riders would only payout if you were 100% disabled in your current occupation and then chose to work in a different occupation. For the Regular Occupation Rider, it would pay the full monthly benefit regardless of the new income in the new job, but this rider does require the 24-month Mental/Nervous limitation. The Transitional Occupation Rider works the same way where you have to be 100% disabled in your current occupation and then choose to work in a new occupation. The difference between these riders is that the Principal will pay the full monthly benefit up to the point where your income from your new job plus the monthly benefit would exceed your prior income. Once you exceed your prior income, Principal would look to lower your monthly benefit so you couldn’t be making more than the prior income (Transitional Occupation Rider). This Rider does not require the 24-month mental nervous limitation so you would have full coverage for that. It makes sense to go with Your Occupation Rider over the Transitional Occupation Rider because the Your Occupation Rider allows for more income.
So to wrap it up, Your Occupation period is on all Principal policies. You would then add additional riders to add strength to the disability insurance policy. In my opinion, the residual rider is the most important rider to always have on your policy because it adds coverage if you are partially disabled. Then, like most physicians, you want to have the True Own-Occupation coverage so adding the Regular Occ. Rider or the Transitional Occ. Rider would add additional coverage to strengthen your policy.
Bob Bhayani will be able to cover specific examples with you on the phone if you have any questions or concerns.