Income Protection Definitions
The quality of your income protection cover, or how likely it is to pay out if you cannot work, is determined by your policy's definition of disability.
The importance of having the correct definition cannot be stressed too highly. If you have a poor quality disability definition, it could mean that your policy will not pay out, leaving you with no money.
The four main disability definitions are:
Own Occupation:
This is the best type of income protection cover available. It will pay out if you are unable to do the material and substantial duties of your job. Material and substantial duties are those normally done in your occupation and which cannot reasonably be left out or changed by you or your employer.
Own or Suited Occupation:
This definition is not quite as good as the 'own occupation' definition described above, however, it still provides worthwhile cover. It will pay out if you are unable to do the material and substantial duties your own job or any to which you are reasonably suited by your education, training, knowledge or experience.
Aspects of Daily Work or Aspects of Daily Living:
This definition varies between insurers, however, it typically depends upon an inability to carry out certain specific tasks, such as sitting, walking, lifting, getting up from a chair, bending or kneeling or performing domestic duties. You would usually have to unable to carry out at least three of the range of such tasks. Each of the tasks would have an exact definition, for example, 'walking' might be defined as (the inability to) "walk 200 metres without stopping at a reasonable walking pace and without the use of sticks, crutches or other assistive devices".
Any Work:
A policy with this disability definition would not pay out unless your were so ill or so severely disabled that you were incapable of carrying out any work whatsoever. This is an extremely poor definition and the value of a policy with such a definition of disability would be questionable.
