Loss of Income insurance provides which of the following?

• A. Covers medical expenses
• B. Replaces wages
• C. Provides disability benefits directly
• D. Pays for life insurance

Answer: (B)

Loss of Income insurance, also called disability income insurance, is designed to replace the earnings you would lose if you’re unable to work due to illness or injury. The core purpose is to provide a regular cash benefit to cover living expenses while you’re disabled, which is why the best description is that it replaces wages. It doesn’t pay medical bills (that’s what health insurance covers), nor is it intended to be a life insurance product. So the focus of this coverage is to offset the gap in income caused by disability, not to handle medical costs or provide a death benefit.