Common Disability Insurance Terms

Please overlook the following terms that pertain to disability insurance in the state of Massachusetts. Disability insurance policies can vary in Massachusetts and Boston, so it is very important to understand the different terms that are common to all policies:

Benefit Amount

This is the portion of your salary that is covered by your policy.  Usually, coverage is available to replace 45%-75% of your salary.

Benefit Period

This is the length of time that you will receive policy payments. Generally one can choose a period of six months, one, two, five and 10 years, or to age 65.

Elimination Period

This is the waiting period that must be satisfied before payments commence after your disability. Generally, one can choose from periods of 30, 60, 90 or 180 days. Sometimes, longer elimination periods are available.

Own Occupation

This term is also referred to as “own occ”.  It is a feature of a policy referring to the definition of disability.  If one has a policy that has “own occ”, their benefits will be paid if they are unable to perform the majority of the tasks of their occupation.  Whereas, under the standard definition of disability, in most circumstances, it refers to the ability to perform the majority of tasks related to any occupation for which your experience, ability and education could allow you to do (i.e. toll booth operator, fast food employee, telemarketer).

Guaranteed Renewable

This feature, which most policies will have, gives the policy owner the right to renew the policy each year (usually until age 65), with the only requirement to do so being the annual premium. The insurer cannot cancel the policy or change the benefits during the guaranteed renewable period. However, the insurer does reserve the right to change premiums in a given rating class, such as a particular occupation, if it does so for all of the policy owners of that class.

Noncancelable

This feature, again, which many policies have, gives the policy owner the right to renew the policy each year, usually until age 65.  During this period, the insurer cannot cancel the policy or change the policy benefits or the premium amounts.

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