Disability Insurance Terms & Definitions

​

Disability insurance policy language and definitions can vary by carrier and contract. The definitions below provide a general overview of commonly used disability insurance terminology and should not replace the specific language contained within an individual policy or group plan.

A

Activities of Daily Living (ADLs)

Basic activities used to measure an individual's ability to independently perform everyday personal tasks. Common ADLs include bathing, dressing, eating, toileting, transferring, and continence. An inability to perform a specified number of ADLs may be used as part of the definition of a catastrophic disability or other policy benefit.

​

Any-Occupation

A definition of disability that considers an insured's ability to work in another occupation, subject to the specific requirements of the policy. Some disability policies may use an Own-Occupation definition initially and transition to an Any-Occupation definition after a specified period.

​

Attending Physician Statement (APS)

An Attending Physician Statement (APS) is medical information requested from an applicant’s physician or medical provider during the insurance underwriting process. An APS may include medical history, diagnoses, treatment information, medications, test results, follow-up recommendations, and other information relevant to evaluating an applicant’s health.

​

Insurance carriers may request an APS when additional medical information is needed to evaluate an application. The specific records or information requested depend on the applicant’s medical history and the carrier’s underwriting requirements.

​

Automatic Increase Benefit

An Automatic Increase Benefit is a policy feature or rider that may automatically increase an insured's disability benefit over a specified period, helping coverage keep pace with anticipated increases in income.

​

Unlike a Future Increase Option, an Automatic Increase Benefit may provide scheduled increases without requiring the insured to separately apply for each increase, subject to the terms and limitations of the policy.

​

Benefit Amount

The amount of disability insurance benefits an insured may be eligible to receive under the terms of the policy. Benefits may be structured as a monthly amount, lump sum, reimbursement of eligible expenses, or another form depending on the type of disability insurance.

​

Benefit Period

The maximum period during which disability benefits may be payable for a qualifying disability. Depending on the policy, benefits may be available for a specified number of months or years, or potentially through a stated age.

​

Business Overhead Expense (BOE) Disability Insurance

Business disability insurance designed to reimburse eligible operating expenses when an insured business owner experiences a qualifying disability. Covered expenses may include rent, employee salaries, utilities, and other eligible business overhead.

​

Buy-Sell Disability Insurance

Disability insurance designed to help provide funding for the purchase of a disabled business owner's ownership interest under a buy-sell arrangement.

C

Catastrophic Disability Benefit

An additional disability benefit that may become payable when an insured experiences a severe disability meeting requirements established by the policy. Eligibility may be based on an inability to perform certain Activities of Daily Living, cognitive impairment, or another qualifying condition defined by the contract.

​

Conditional Receipt

A receipt that may provide a limited form of conditional insurance coverage while an application is being underwritten, subject to the specific requirements and conditions stated in the receipt. Availability and terms vary by carrier and product.

​

Cost of Living Adjustment (COLA)

A policy rider or feature designed to help disability benefits keep pace with inflation during a qualifying disability. COLA generally applies to eligible benefits after a disability has occurred rather than automatically increasing the insured's base monthly benefit while they are healthy.

D

Definition of Disability

The contractual provision that establishes the circumstances under which an insured is considered disabled and may qualify for benefits. Definitions can vary significantly between policies and may include Own-Occupation, Modified Own-Occupation, Any-Occupation, or other contractual definitions.

​

Disability Buyout Insurance

Another term commonly associated with Buy-Sell Disability Insurance. It is designed to help fund the purchase of a disabled owner's business interest following a qualifying disability and satisfaction of the applicable policy requirements.

​

Disability Insurance (DI)

Insurance designed to provide financial protection when a qualifying illness or injury prevents or limits an insured's ability to work. Disability insurance may protect personal income, business expenses, business ownership interests, loan obligations, or other eligible financial risks depending on the type of coverage.

E

Elimination Period

The period of qualifying disability that generally must be satisfied before disability benefits become payable. It is sometimes referred to as a waiting period.

​

Exclusion

A policy provision that excludes coverage for a particular medical condition, activity, body part, circumstance, or other specified risk. An exclusion may be included when the carrier is willing to issue coverage but is unwilling to insure a particular risk.

​

Executive Bonus Disability Insurance

A compensation strategy in which an employer provides additional compensation to help a selected employee purchase individually owned disability insurance. The employee generally owns the underlying individual policy.

F

Financial Underwriting

The process used by an insurance carrier to evaluate an applicant's income, existing disability coverage, employment structure, and other financial information to determine the amount of disability insurance that may be available.

​

Future Increase Option (FIO)

A rider or policy feature that may allow an insured to apply for additional disability insurance as income increases without undergoing new medical underwriting, subject to financial eligibility and the provisions of the policy or rider.

G

Guaranteed Renewable

A policy provision generally allowing an insured to continue coverage as long as required premiums are paid. Under a Guaranteed Renewable policy, the carrier cannot cancel an individual insured's coverage but may retain the ability to change premiums for an entire eligible class of policyholders, subject to the terms of the contract and applicable law.

​

Guaranteed Standard Issue (GSI) Disability Insurance

An Individual Disability Insurance arrangement established for an eligible group that allows qualifying participants to obtain coverage with limited or no traditional individual medical underwriting, subject to the requirements of the GSI program.

I

Individual Disability Insurance (IDI)

An individually owned insurance policy designed to help replace a portion of an insured's earned income during a qualifying disability. Coverage can generally be designed around the insured's income, occupation, existing benefits, and individual coverage needs.

​

​

Income Protection

A general term describing strategies designed to help protect an individual's earned income against the financial consequences of a disability. Individual Disability Insurance is one form of income protection.

K

Key Person Disability Insurance

Business disability insurance designed to help protect a business against the financial impact of a qualifying disability affecting an important owner, executive, or employee.

​

Loan Protection Disability Insurance

Business disability insurance designed to help protect eligible business or practice loan obligations when an insured borrower experiences a qualifying disability. Depending on the coverage, benefits may be structured around monthly loan obligations, a lump-sum benefit, or another available benefit design.

​

​

Long-Term Disability Insurance (LTD)

Disability insurance designed to help replace a portion of earned income during an extended qualifying disability. Individual LTD policies may provide benefits for a specified number of years or potentially through a stated age, depending on the coverage selected.

​

​

Loss of Income

A reduction in earned income that may be considered when determining eligibility or benefits under certain Residual or Partial Disability provisions. The method used to calculate a loss of income varies by policy.

​

​

Loss Payee

A person or entity designated to receive some or all of the proceeds of an insurance policy when specified conditions are met. A loss payee arrangement may be used in certain business or loan-related disability insurance situations.

M

Medical Underwriting

The process through which an insurance carrier evaluates an applicant's medical history and other health-related information to determine eligibility for coverage and the terms under which a policy may be offered.

​

​

Mental/Nervous Limitation

A policy provision that may limit the duration or availability of benefits for disabilities resulting from certain mental, nervous, psychiatric, or substance-related conditions. Definitions and limitations vary significantly by policy.

​

​

Modified Own-Occupation

A definition of disability generally based on an insured's inability to perform the duties of their own occupation while also considering whether the insured is working or able to work in another occupation. The exact definition varies by policy.

​

​

Monthly Benefit

The amount of disability insurance benefit that may be payable each month during a qualifying disability, subject to the terms and provisions of the policy.

​

​

Multi-Life Disability Insurance

An arrangement through which multiple individuals associated with a common employer or eligible group obtain individually owned disability insurance policies. Depending on the program, Multi-Life arrangements may provide access to discounts or other program features.

N

Non-Cancelable

A policy provision generally preventing the insurance carrier from canceling the policy, changing its contractual provisions, or increasing the insured's premium as long as required premiums are paid and the policy remains in force, subject to the terms of the contract.

​

​

Non-Medical Underwriting

An underwriting approach that may allow eligible applicants to obtain coverage without traditional medical requirements such as an examination, laboratory testing, or certain medical records. This does not necessarily mean that no health information is considered.

​

Occupational Class

A classification assigned by an insurance carrier based on an individual's occupation and job duties. Occupational class can affect eligibility, available benefits, policy provisions, and the cost of disability insurance.

​

​

Own-Occupation

A definition of disability that generally evaluates whether an insured can perform the material and substantial duties of their occupation. How benefits apply, including whether an insured may work in another occupation, depends on the specific contractual definition.

​

P

Partial Disability

A policy provision or benefit addressing a disability that limits an insured's ability to work without causing a complete inability to perform all occupational duties. Eligibility requirements and benefit calculations vary by policy.

​

​

Participation Limit

The maximum amount of disability insurance an insurer may allow based on an individual's income and existing disability coverage. Participation limits vary by carrier and financial circumstances.

​

​

Policy Rider

An optional or included provision that modifies or adds benefits, features, limitations, or other terms to an insurance policy.

​

​

Pre-Existing Condition

A medical condition or circumstance existing before the effective date of coverage that may be subject to limitations or exclusions depending on the policy and applicable provisions.

​

​

Presumptive Disability

A policy provision under which certain severe losses or conditions may automatically satisfy the policy's requirements for total disability. The specific conditions qualifying as presumptive disabilities vary by policy.

R

Rating

An underwriting decision that increases the premium for coverage because of an applicant's medical history, occupation, activities, or another risk factor. The amount and structure of a rating vary by carrier and circumstance.

​

​

Recovery Benefit

A policy provision that may provide benefits following a period of disability when the insured has returned to work but continues to experience a qualifying financial loss associated with the prior disability. Requirements vary by policy.

​

Recurrent Disability

A Recurrent Disability is a disability that returns after an insured has recovered from a previous disability caused by the same or a related condition.

​

Depending on the policy and the amount of time between periods of disability, a recurrent disability may be treated as a continuation of the previous claim rather than a new disability. This may affect whether a new elimination period must be satisfied and how the benefit period is determined

​

​

Residual Disability

A policy provision that may provide benefits when an insured continues working but experiences a qualifying reduction in income, duties, time worked, or another measure defined by the policy because of a disability.

​

​

Retroactive Injury Benefit Rider

A Retroactive Injury Benefit Rider is a disability insurance rider that may provide benefits from the date of a qualifying accidental injury when the insured's disability continues beyond a specified period.

​

Although the policy may normally include an elimination period before benefits become payable, this rider can allow eligible benefits associated with a qualifying injury to be paid retroactively, subject to the specific terms and requirements of the policy.

​

Return of Premium (ROP)

A policy feature or product design that may return a portion of eligible premiums when specified requirements are satisfied. The timing, amount, and conditions associated with a Return of Premium benefit vary by policy.

S

Short-Term Disability Insurance (STD)

Disability insurance designed to provide income protection during shorter periods of qualifying disability. STD generally has a shorter elimination period and benefit period than Long-Term Disability Insurance.

​

​

Simplified Underwriting

An underwriting process that may require less medical information than traditional fully underwritten coverage. Requirements and eligibility vary by carrier and program.

​

Social Security Disability Rider

A Social Security Disability Rider is a disability insurance rider that provides an additional benefit based on the insured's eligibility for certain government disability benefits, particularly Social Security Disability Insurance (SSDI).

​

Depending on the rider, the benefit payable by the insurance policy may be reduced by benefits received from Social Security or other specified government programs. If the insured does not receive an applicable government benefit, the rider may provide some or all of the stated rider benefit, subject to the policy's provisions.

​

​

Specialty Own-Occupation

An Own-Occupation provision that may recognize an insured's medical, dental, or other professional specialty when determining their occupation for purposes of a disability claim. Whether and how a specialty is recognized depends on the specific policy language and occupational duties.

​

Student Loan Rider

A Student Loan Rider is an optional disability insurance rider designed to provide an additional benefit to help cover eligible student loan obligations during a qualifying disability.

​

The benefit is generally payable in addition to the policy's base disability benefit and may be subject to a separate maximum benefit amount, benefit period, and eligibility requirements. Covered loans and rider provisions vary by policy and carrier.

​

​

Survivor Benefit

A Survivor Benefit is a policy provision that may provide an additional benefit to an eligible beneficiary if the insured dies while receiving disability benefits or after satisfying certain disability requirements.

​

The amount of the benefit, eligibility requirements, and timing of payment vary by policy

T

Total Disability

A contractual definition describing the circumstances under which an insured is considered totally disabled for purposes of receiving benefits. The requirements depend on the definition of disability contained within the policy.

​

​

True Own-Occupation

A form of Own-Occupation definition that may allow an insured who cannot perform the material and substantial duties of their occupation to receive total disability benefits even if they choose to work in another occupation, subject to the specific terms of the policy.

​

W

Waiver of Premium

A policy provision that may waive required premiums during a qualifying disability after applicable policy requirements have been satisfied. This allows coverage to remain in force without requiring the insured to continue paying premiums while eligible for the waiver.