If you were to ask me what I think disability is (not the best conversation, admittedly), I would probably list types of disability such as paraplegia, blindness, deafness and others which would be a category at the Paralympics.
I imagine most people think that this is what disability is. Yet, strangely, insurers don’t use this definition at all (in fact, they often call those disabilities “physical impairments”). Complicated, I know. But done for good reason.
What is disability to Indie?
We use what we call an occupational definition of disability. Does that help? Nope? Well, what we mean by that , is that we define someone as being disabled if they are unable to do their job as a result of a physical or medical condition.
Perhaps we need some examples.
Let’s compare two people with different occupations. An accountant. And a ballerina. (They probably don’t know each other.)
We can agree, these are two very different occupations. And in an insurance context, this matters a lot.
This is because one of them can be more easily disabled (using our definition) than the other. Let’s imagine these two people, for some unfortunate reason, both have to have an amputation of their foot. (I apologise, insurance is somewhat grim — and so are the examples.)
Do you think the loss of a foot would make a ballerina disabled? This is an obvious, “Yes”. A ballerina cannot do their job without a foot.
And what about the accountant? This may not be as obvious, but an accountant losing a foot does not make them disabled, using an occupational definition (although it does at least give them an interesting story to tell). This is because the accountant doesn’t use their foot to do their job. Obviously they would prefer to have both feet, but the work of an accountant doesn’t rely on having feet.
So why do we (and most other insurers) work like this?
It’s simple really — we look at the purpose of the disability insurance.
People need insurance to protect themselves should they be unable to do their job (and hence, are unable to earn an income). Therefore, a product which pays out when someone is unable to do their job, is one with an occupational disability definition.
Plus, and this is also grim — if people could get paid for losing a foot — but they could still do their jobs and earn their incomes — there would be a lot more lost feet. But this is a topic for another day.