What is the primary function of disability income insurance?

The primary function of disability income insurance is to replace a portion of the policyholder's income when they are unable to work due to a disability. This type of insurance is designed to provide financial support during a period of lost wages. By offering a steady income stream, it helps individuals maintain their standard of living and cover necessary expenses, such as rent or mortgage payments, utilities, and daily living costs, when they are unable to perform their work duties.

Disability income insurance focuses specifically on income replacement rather than other areas such as life insurance, which provides benefits to beneficiaries upon the policyholder's death. Similarly, it does not cover funeral expenses or pay for medical bills directly. Instead, the aim is to assist individuals financially by compensating for lost income as a result of a qualified disability, making it a vital source of support for those facing unexpected health challenges.