What is the primary purpose of disability insurance?

Disability insurance is designed primarily to replace lost income that an individual experiences due to a temporary or permanent illness or injury that impairs their ability to work. The core function of this type of insurance is to ensure financial stability during periods when a person is unable to earn income due to health-related issues.

In many cases, an unexpected illness or accident can lead to significant financial strain, as individuals may not be able to rely on their regular paycheck. Disability insurance alleviates some of this burden by providing a portion of the insured's income, allowing them to cover necessary living expenses such as housing, food, and utilities, thus maintaining their standard of living during recovery.

This coverage is particularly vital because, unlike health insurance, which specifically pays for medical expenses, disability insurance directly replaces the income that is lost, addressing the broader financial implications of being unable to work.