How to Insure Your Income: The Mechanics of Disability Income Insurance Conclusion

For most people, a residual policy -- or a disability income contract that provides a residual benefit -- may be more relevant than the traditional type of policy. Disability income is designed to replace lost income due to a disability. It seems both logical and meaningful to provide benefits based on loss of income, rather than the inability to perform duties of an occupation.

Beyond the distinction between traditional and residual policies, most of the negotiable terms of disability insurance are controlled by optional provisions.

This chapter considered the mechanics of disability income insurance and what you should be aware of when purchasing a policy. Also, it examined what insurers look for in an applicant, as well as some important definitions. The next chapter considers how insurance companies price the disability policies they sell.