Disability Insurance - Can You Work and Still Receive Disability Benefits?

In a good individual disability insurance policy, the definition of total disability should read similar to: Total disability means that due to sickness or injury, you are not able to perform the material and substantial duties of your occupation, even if you are at work in some other capacity, as long as you are not able to work in your own occupation. This is what we call, in the insurance industry, a true own occupation policy. Your occupation means the regular occupation (or occupations, if more than one) in which you are engaged at the time you become disabled. If you are a physician, in some policies, the definition is further defined as your medical specialty (as certified by the American Board of Medical Specialties).


With a true own occupation policy, if you are disabled per this definition and you choose to work in another occupation, you will continue to receive your full total disability benefit, in addition to your new income. So, with this definition of total disability, the answer to the question posed in this article's title is yes.

There is another own occupation definition we call, in the industry, a modified own occupation definition. This definition would read similar to: Total disability means that due to sickness or injury, you are not able to perform the material and substantial duties of your occupation, and you are not working. You can clearly see that the difference between the modified and true own occupation definitions is the addition of the words and not working to the modified own occupation definition. If you can't perform the usual and customary duties of your occupation, you will receive your benefits unless you decide to go to work in another capacity.

Who needs a true own occupation definition in their policy? I would say that there are two categories of people who should definitely have this definition in their disability insurance policy:

The first group consists of people who could not consider being out of work for a long period of time if they were capable of working in some capacity. I know I would fall into that category. I enjoy working and being productive and would probably drive my family crazy if I was not producing something, provided I was able to do so.

The second group (provided they also fall into the first category) consists of highly skilled and highly paid individuals who have acquired their skills (and ultimate financial success) through many years of training. A surgeon is a good example of a person who fits into this group. If he/she permanently injured a hand, for instance, he/she would probably not be able to continue as a surgeon. However, also falling into the first category, he/she wants to continue working as a medical professional - maybe in family practice, or perhaps working as an administrator at a health plan. There would most probably be a significant drop in income, so the disability benefits received would certainly be a big financial boost to this former surgeon.
Another way one can receive disability benefits if one is till working would be with a residual (partial) benefit. If your policy has a Residual Disability rider, you could possibly receive partial benefits if, due to illness or injury, you can only work part-time or you can perform some, but not all of the duties of your occupation and you suffer at least a 20% (15% in some policies) loss of income. If residually disabled, you would receive a percentage of your total disability benefit proportionate to your loss of income (e.g., you have a 40% loss of income, you would receive 40% of your total benefit).