South Carolina Life and Health Practice Exam

What is the primary factor that determines the benefits paid under a disability income policy?

1. Duration of the policy

2. Wages

3. Health status

4. Age of the insured

The correct answer is: Wages

The primary factor that determines the benefits paid under a disability income policy is the insured's wages. This is because disability income policies are designed to provide financial protection by replacing a portion of the insured's income if they become unable to work due to a covered disability. Insurance companies typically calculate the benefit amount based on the insured's earnings prior to the disability, as this ensures that individuals receive compensation that aligns with their income levels. The policies generally provide a specific percentage of the insured's pre-disability income, which helps maintain their standard of living during the period of disability. While other factors such as duration of the policy, health status, and age of the insured may influence the overall terms and conditions of coverage, it is the insured's wages that are critical in determining the specific benefit amount that will be received should a claim arise. Thus, understanding the link between income and disability benefits is essential for assessing the value of a disability income policy.