Which factor is most often used when underwriting a disability income policy?

• A. Annual earnings
• B. Age
• C. Occupation
• D. Medical history

Answer: (A)

Disability income policies are built to replace a portion of the insured’s earned income. Because the primary goal is to provide income during disability, the underwriting focuses on how much income the policy should replace. The benefit amount is typically tied to annual earnings, with the monthly benefit set as a percentage of that earnings figure (often with a cap). So higher earnings mean a higher potential benefit and usually a higher premium. While age, medical history, and occupation influence eligibility and rates, they don’t determine the benefit level as directly as earnings do. That’s why annual earnings is the most relevant factor in underwriting a disability income policy.