Disability Insurance in New England
Your income is your most valuable asset — it funds everything else in your financial plan. If you were unable to work for any length of time because of illness or injury, could you continue to support your family and pay your bills? If you became disabled, how much money would be coming in each month, and from what sources?
For many workers, the answer is: not enough. Some employers provide group disability coverage, and Social Security disability income exists as a government backstop. But for many people, those sources fall far short of what they actually need to maintain their lifestyle and meet their financial obligations. Individual disability income insurance is designed to replace a significant portion of your income when illness or injury prevents you from working.
Cleary Insurance works with Massachusetts and New England individuals and business owners to evaluate their disability exposure and find the right coverage through our carrier network.
How Disability Insurance Works
An individual disability income policy pays a monthly benefit — typically 60 to 70 percent of your pre-disability income — while you are unable to work due to a covered illness or injury. Benefits continue for the benefit period specified in the policy, which can range from two years to age 65 or longer, depending on the policy you choose. The policy’s elimination period (the waiting period before benefits begin) typically runs from 30 to 180 days.
Unlike group disability coverage provided by an employer, an individual disability policy is portable — it stays with you if you change jobs — and the benefit is typically tax-free if you pay the premiums yourself.
Frequently Asked Questions
What does disability insurance cover?
Individual disability income insurance pays a monthly benefit when a covered illness or injury prevents you from performing the material duties of your occupation. Some policies cover “own occupation” disability — meaning you receive benefits if you cannot perform your specific job, even if you are able to work in a different capacity. Others cover “any occupation” disability, which is a harder standard to meet. Own-occupation coverage is particularly important for professionals such as surgeons, attorneys, and other specialists whose income depends on performing a specific function.
What is the difference between short-term and long-term disability insurance?
Short-term disability insurance covers the initial period of a disability — typically the first 3 to 6 months. Long-term disability insurance begins after the short-term period ends and can continue for years or until retirement age. Many employers provide short-term disability through group benefits; long-term disability coverage is where the bigger financial gap typically lies. Cleary evaluates both when reviewing a client’s full disability protection picture.
Doesn’t my employer’s group disability plan cover me?
Group employer disability coverage is a starting point, but it often has meaningful gaps. Group long-term disability typically replaces 60 percent of base salary and does not include bonuses or other variable compensation. Benefits may be taxable if the employer pays the premiums. Coverage ends when you leave the employer. And benefit amounts under group plans are often capped at a level that is insufficient for higher earners. Cleary can review your employer plan and identify whether a supplemental individual policy is appropriate.
What is an elimination period on a disability policy?
The elimination period is the waiting period between the onset of disability and when benefits begin. Common elimination periods are 30, 60, 90, or 180 days. A longer elimination period lowers the premium, but means you need to cover more months of expenses out of savings before benefits kick in. Choosing an elimination period that aligns with your emergency fund and any short-term disability coverage you have is part of structuring the right disability policy.
Is disability insurance more important than life insurance?
For working-age adults, disability is statistically more likely than death during their career. The Social Security Administration estimates that more than one in four workers will experience a disability before reaching age 67. Despite this, disability insurance is far less commonly purchased than life insurance. Both types of coverage are important, but disability protection — protecting your earning power — is often the gap that needs to be addressed first.