Health Insurance Mastery Practice Exam

What type of insurance is designed to provide income when an insured is unable to work due to a disability?

1. Life insurance

2. Disability income insurance

3. Health insurance

4. Long-term care insurance

The correct answer is: Disability income insurance

Disability income insurance is specifically designed to replace a portion of the income lost when an individual is unable to work due to injury or illness. This type of insurance plays a critical role in financial protection because it helps ensure that individuals can meet their living expenses, such as housing, food, and other bills, despite being temporarily or permanently unable to earn an income. This insurance typically pays a percentage of the insured's salary, subject to certain limits and waiting periods, and can provide coverage for both short-term and long-term disabilities. The primary purpose is to offer financial stability during a challenging time when the insured cannot support themselves through work due to a disability. In contrast, other types of insurance mentioned do not serve this specific purpose: life insurance pays a benefit upon the insured’s death, health insurance primarily focuses on covering medical expenses, and long-term care insurance helps with costs associated with extended care needs, not lost income. Understanding the distinct purpose each type of insurance serves can help individuals choose the appropriate policies for their needs effectively.