PSI Ohio Insurance Practice Exam

Which insurance policy type provides specified income benefits if the insured becomes unable to work?

1. Life insurance

2. Disability income insurance

3. Health insurance

4. Accidental death insurance

The correct answer is: Disability income insurance

Disability income insurance is designed specifically to provide financial support in the event that an insured individual is unable to work due to a covered disability. This type of policy pays out a percentage of the insured's income, helping to replace lost earnings and offering crucial financial relief during a period when the individual cannot earn their usual income. Unlike other types of insurance, such as life insurance, which offers a payout upon the insured's death, or health insurance, which covers medical expenses resulting from illness or injury, disability income insurance focuses on maintaining the policyholder's income. It is particularly valuable because it directly addresses the risk of losing income due to a temporary or long-term disability, allowing the individual to meet their living expenses during the recovery period. Accidental death insurance, on the other hand, provides benefits only in the case of death resulting from an accident, which does not address income replacement in the scenario of a disability. In summary, disability income insurance specifically targets the financial implications of being unable to work due to a disability, justifying its position as the correct answer.