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6. Can I receive disability insurance benefits when I am unemployed?

It is possible to receive benefits under an individual disability policy if one becomes disabled while unemployed. These claims are complicated given the general rule that a disability must be measured against an occupation one is engaged in at the start of disability.

There are times, however, when an individual may be laid off and job hunting or perhaps left the workforce temporarily to care for a sick loved one. In these situations, the disability insurer should look for evidence as to whether the policyholder intended to return to the occupation or had they abandoned the occupation (i.e. retired).

If the circumstances reveal that the insured intended to return to the occupation, the insurer will likely measure the disability against that occupation.

Please note that some individual disability policies may have a termination of coverage feature that provides that after a certain age, such as 65, the coverage ends if the insured is not working a specified number of hours per week.

Finally, the issue of unemployment will likely have a more dramatic effect in the context of group disability coverage, since generally group disability insurance for employees ends once they are no longer employed by the employer who provides the group coverage. This may not be applicable, however, if the group disability coverage offers a conversion benefit allowing the departing employee to convert the group coverage into individual coverage.