A disability income policy can prevent an insured from earning a higher income than if he/she were working by utilizing

• A. Waiting period
• B. Premium credits
• C. Benefit limits
• D. Riders

Answer: (C)

Disability income policies are designed to replace part of a person’s earnings during a period of disability. To prevent paying out more than the insured would earn if they were working, these policies use benefit limits. By capping the monthly benefit, the insurer can ensure that the total income from benefits (and any earned income) stays within a reasonable range and doesn’t exceed what the insured would have earned while employed. A waiting period just delays benefits, premium credits relate to premium adjustments rather than benefit amounts, and riders add or modify coverage—not this cap on benefits.