Washington Life Producer Practice Exam

What is the term for insurance that covers the risk of loss of income due to inability to work?

1. Health insurance

2. Disability insurance

3. Long-term care insurance

4. Life insurance

The correct answer is: Disability insurance

Disability insurance is designed specifically to provide financial support in the event that an individual is unable to work due to a disability or medical condition. This type of insurance replaces a portion of the insured's income when they are unable to perform their job functions, helping to cover essential expenses such as rent, mortgage, and bills. Disability insurance ensures that individuals can maintain their standard of living even when facing unforeseen circumstances that prevent them from earning a salary. In contrast, health insurance primarily covers medical expenses related to healthcare services, but does not address income loss. Long-term care insurance assists with costs associated with long-term care services, such as nursing homes or in-home care, but again does not focus on income replacement. Life insurance provides a benefit to beneficiaries upon the death of the insured but does not aid those who are living and unable to work due to a disability. Thus, the focus of the question on income loss makes disability insurance the accurate choice.