What is disability insurance?

What is disability insurance?

• A. A program managed by the Social Security Administration that insures a worker in case of a mishap. This insurance offers income protection to individuals who become disabled for a long period of time, and as a result can no longer work during that time period.
• B. A plan funded by employers for private sector workers.
• C. A life insurance program.
• D. A short-term disability plan provided by private insurers.

Answer: (A)

Disability insurance provides income replacement when a person is unable to work due to illness or injury for an extended period. The option described points to a government program run by the Social Security Administration that pays monthly benefits to workers who become disabled and cannot work for a long time. This type of coverage is designed to protect earning power over the long term, rather than being life insurance (which pays after death) or a short-term plan (which typically covers only brief periods and is often private or employer-provided).

Disability insurance provides income replacement when a person is unable to work due to illness or injury for an extended period. The option described points to a government program run by the Social Security Administration that pays monthly benefits to workers who become disabled and cannot work for a long time. This type of coverage is designed to protect earning power over the long term, rather than being life insurance (which pays after death) or a short-term plan (which typically covers only brief periods and is often private or employer-provided).