disability income insurance
Insurance replacing a percentage of income if the insured becomes unable to work due to illness or injury.
Example
“Disability income insurance replaced 60% of her salary during the 18-month recovery.”
Memory Tip
PROTECT YOUR INCOME — it is your most valuable financial asset.
Why It Matters
Disability income insurance protects your most valuable asset: your ability to earn money. If you become unable to work due to illness or injury, this insurance helps maintain your lifestyle and cover essential expenses like mortgage payments, groceries, and medical bills while you recover or adapt.
Common Misconception
Many people assume that workers compensation or Social Security disability will fully replace their income if they cannot work. In reality, these programs have strict eligibility requirements, lengthy approval processes, and often provide much less coverage than needed to maintain your current standard of living.
In Practice
A 35-year-old software engineer earning 120,000 dollars per year purchases a disability insurance policy that replaces 60 percent of income. If she sustains a back injury that prevents her from working for 18 months, the policy would pay her 6,000 dollars per month, allowing her to cover her mortgage and expenses while she recovers and retrains for a different role.
Etymology
Modern insurance term — protecting the most valuable financial asset: earning capacity.
Common Misspellings
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