Hello again, In chapter 2, it states that for occupations where it is easy to become disabled with minor injuries, it is best to use the second definition instead of using own occupation. How does the reclassification help the company (since those occupations would just be moved to another classification and would increase the claims cost for that definition)? Thanks.
Hi, Consider the example of a professional pianist. Breaking a finger would render the pianist unable to play professionally, and so with an own occupation definition, this would probably lead to an IP claim. However, if the claim definition was the second one (the "suited" occupations), then the pianist could find alternative suited employment, for example, as a piano teacher, and this would not lead to an IP claim. I hope this helps! Anna
Hi Anna, I'm unfamiliar with these types of products but I thought that the policyholder could choose at outset which disability category they would prefer if a claim were to arise. I just figured category 1 would be more expensive. Thank you!
The insurance company will choose what products it wants to offer to applicants - it might decide that insuring a pianist on an own occupation definition is too risky, so will only offer a suited occupation definition. If the insurance company offers a range of definitions, then the applicant can choose, and will pay a premium appropriate to that cover.
