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Insurance · Disability Income and Long-Term Care

What is the purpose of disability income insurance?

Reviewed by Jordan Morley, Editorial Lead at 247SimpleTests. Written by the 247SimpleTests Editorial Team from the official source material cited on every question.

Correct answer

To replace a portion of the insured's income if they become unable to work due to a covered illness or injury

  1. A To cover property damage
  2. B To pay medical bills directly
  3. C To replace a portion of the insured's income if they become unable to work due to a covered illness or injury
  4. D To pay a death benefit

Why this is the answer

Disability income insurance replaces a portion of an insured's earned income (commonly around 50–70%) if they become unable to work because of a covered illness or injury. Unlike health insurance, which pays for medical treatment, disability income insurance addresses the lost paycheck. Key features include the elimination (waiting) period before benefits begin, the benefit period (how long benefits last), and the definition of disability (such as 'own occupation' versus 'any occupation'). It protects the insured's most valuable asset — their ability to earn income. Understanding the income-replacement purpose of disability insurance is standard disability-and-LTC content.
Source: NAIC Model Outline, Disability Income

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About this topic: Disability Income and Long-Term Care

Disability income and long-term care questions cover definitions of disability, elimination and benefit periods, riders, and the triggers and benefits of long-term care policies including partnership programs. This is one of 9 Health Insurance questions on disability income and long-term care, each with a full explanation on a single study page.

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