Disability income policies may pay how much of the insured's income?

• A. A full 100% of income
• B. A fixed monthly benefit unrelated to earnings
• C. A portion of income, not 100%
• D. No income replacement

Answer: (C)

Disability income policies are designed to replace only a portion of the insured’s earnings. They aim to provide financial support while the person can’t work, but not to pay the full salary. Benefits are usually calculated as a percentage of pre-disability earnings (often around 60%–70%), sometimes with a monthly maximum, and they may be offset by other income like Social Security or workers’ compensation. This partial replacement keeps the policy affordable for premium purposes and preserves the incentive to return to work.

Full replacement of income would be extremely expensive and can create incentives to stay disabled longer; a fixed amount unrelated to earnings wouldn’t reflect how much the person earned prior to disability; and a policy that paid no income replacement wouldn’t serve the core purpose of disability coverage.