Great question. Long term disability insurance policies are legally binding agreements between you and the insurance company. The core of this agreement is what legally determines whether you are classified as disabled and become eligible to receive your benefits, referred to as the "Definition of Disability". It’s critical to choose a policy with an own-occupation definition of disability, which will consider you disabled in the event that you cannot perform your specialty-specific medical duties. This is the opposite of "any occupation", which means that you will only be disabled in the event that you cannot work in another occupation (medical or non-medical).
Let’s look at an example. If you are an orthopedic surgeon and develop severe arthritis to the point where you cannot perform surgery, you would be considered fully disabled under an own-occupation disability insurance policy. This is because you would be unable to perform the material and substantial duties of an orthopedic surgeon, or your "own-occupation". Under an "any-occupation" policy, the insurance company could argue that you are still able to be employed in other medical specialties, or even employment opportunities outside of medicine. Under an "any occupation" policy, you would not receive full benefits, if any.
These policies are individually owned policies and continue to stay in place in the event you switch employers. Benefits paid in the event of disability are typically not taxable and cannot be reduced by other forms of income (i.e. investments, social security, etc.). Individual policies are typically characterized as follows:
Group or association policies, like the AMA Disability Insurance plan, cover multiple employees or members under one master contract and rates are based on the current age of employees under the plan. For group plans, the benefits paid are typically taxable as pre-tax money is used to cover the cost of the plan. Group policies typically have the following characteristics.