General Insurance✓ Verified · outline & fact-checked · Sep 2026Difficulty 1/5
Which of the following is the loss that disability income insurance is designed to address?
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Answer & full 3-part explanation (select an option above, or peek)
Why B is correct
Disability income insurance replaces earned income that the insured loses when a covered disability prevents work. Its purpose is to protect the insured's ability to earn, which for most people is the most valuable asset they own. Losses of investment value, paid premiums, or credit standing are not the risks that this product is designed to address, and coverage is measured against the income the insured would have earned but for the disability.
Why the other options are wrong
- A) Investment losses are speculative risks and are not covered by disability income policies.
- C) Premiums are the cost of the protection, not a loss that the policy compensates.
- D) Credit rating is unrelated to the income-replacement purpose of disability insurance.
Memory hook
Disability income replaces your paycheck, not your investment portfolio.