Disability Insurance

Disability income insurance (DI) provides replacement income to an insured in the event a covered illness or accident results in a disability that prevents him or her from working.

To see a list of companies offering DI policies, please click here

How does DI differ from Worker’s Compensation or Social Security Disability Benefits?

Worker’s Compensation provides income replacement coverage if you become injured or sick while at your job or performing duties relating to your job.  Worker’s Compensation is Massachusetts-regulated coverage that employers must have for their employees.  It provides a standard level of compensation according to Massachusetts laws until the worker is able to return to their job.

Social Security Disability Income (SSDI) provides income replacement if an individual meets federally determined disability eligibility standards, usually that the individual is not able to do any job as a result of the disability.  SSDI is a federal government program which pays standard benefits to SSDI eligible persons who are unable to work in any job.  Everyone who is eligible for federal Social Security is eligible for benefits under this program.

DI is a voluntary insurance product that an individual can purchase – at the workplace or through an insurance producer - that provides income replacement benefits when disabled according to the specific standards of the insurance coverage and depending on the policy, benefits may be limited to a strict period of time or may be available only if you are unable to do the work of a stated profession.  Individual DI coverage is medically underwritten and an individual cannot generally obtain this coverage if they are already injured or disabled. 

There are two types of disability insurance, short-term and long-term. The main difference between STD and LTD is the period of time the consumer receives benefits if he or she is unable to work. This period is called the benefit period. Short-term will typically replace a portion of the policyholder's salary for three to six months. Long-term will generally begin six months after the disability and can last years or even until retirement age. 

How do companies calculate premiums?

Companies pool the experience of all covered persons to develop actuarial projections of the amount of premium to collect in order to pay out expected income replacement benefits.  Premiums can differ from one person to another based on a person’s age, income, personal and family medical history or other reasonable factors.

What factors cannot determine my DI premium?

Insurers are prohibited from discriminating in insurance premiums based on a person’s race, color, religion, and nationality.

Beginning January 1, 2020, insurers offering Massachusetts-approved individual DI in Massachusetts will also be prohibited from varying premiums solely based on a person’s gender, gender identity, sexual orientation, marital status, or the person being pregnant.

How will this change affect me as a consumer?

Historically, insurers offering Massachusetts-approved individual policies have priced policies differently based on gender when supported by claims history.  For instance, a 30 year old woman could have a higher premium than a 30 year old man with the same health and medical history

However, individuals purchasing a Massachusetts-approved individual DI policy on or after January 1, 2020 cannot be charged differently solely based on the individual’s gender. This means a man and woman of the same age and all other things being equal will be charged the same rate.  This will not impact the premiums on policies that were purchased prior to January 1, 2020.

If you have a group DI policy (typically offered through your employer), please note that these policies have already been offered with gender neutral rates and the Massachusetts statute should not impact these policies.

There may be plans approved outside Massachusetts that are not subject to this statutory change.  However, Massachusetts-approved plans are required to be gender neutral.

If I already have an individual DI policy, can it be cancelled as a result of this change?

No.  Individual DI plans are usually issued on a guaranteed renewable basis so that the coverage continues as long as you are paying the premium.  Even if an insurer decides to cease offering new products, that insurer is required to continue coverage for guaranteed renewable products issued prior to ceasing new sales.

Am I required to take a medical exam before getting the policy?

If you are purchasing individual DI, it is likely that insurers want to know how risky you are to insure and may only consider issuing coverage if they are able to gather information from a medical examination, a questionnaire or both.

Can an insurer deny my application for DI?

DI is a medically underwritten product. If an insurance company believes your risk is too high, they can choose not to provide you individual coverage as long as that denial is not based on any prohibited factors. 

When can I receive benefits after I file a claim?

Most disability income policies contain a waiting period – sometimes called an elimination period - and will not pay benefits until the period is complete. This period may vary by insurer and policy so it is best to check with your insurer.

Can I obtain DI through my place of employment?

Some employers offer DI as an employee benefit to employees during open enrollment period. Interested employees should discuss with their HR benefits advisor.

Could my policy be cancelled if I leave my job for some reason?

Yes, if it is an employer group policy, coverage may end when you cease employment.  The reasons for which your policy may be cancelled will be outlined in your certificate of coverage.

Can I receive benefits from my disability income (DI) policy in addition to other income?

DI plans often have language in their policies that specifically identifies that certain types of income, such as Social Security Disability Insurance (SSDI) benefits, will be taken into account and may reduce the total payout from the DI policy. These policies usually include language that emphasizes the recipient’s responsibility to notify the carrier immediately if the recipient begins to receive payment from these other sources or require corresponding overpayments to be reimbursed to the carrier. It is not uncommon for a DI carrier to pay out benefits, subsequently discover that the recipient has been receiving SSDI benefits during the same period of receiving DI benefits, and request a reimbursement of DI payments.

Massachusetts law, M.G.L. c. 175 § 110F, does not allow for benefits due under a DI policy to be reduced by an future increases in federal social security benefits once payment of disability benefits has commenced. However, this only applies to STD policies.  

The insurance company denied my claim, what can I do?

You can appeal it through the insurer’s internal appeals process. If you think the insurance company has violated any law or regulation, you are welcome to file a complaint with us.

Can I get a list of companies offering DI?

Please refer to the link below for a list of companies that are offering individual disability policies. You can contact the company directly. For ratings of the company, contact A.M. Best Company, Fitch Ratings, Moody’s, etc.

Additional Resources

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