Life License Qualification Program (LLQP) Practice Exam

What is a key feature that differentiates disability income policies from other types of insurance?

1. Cash value accumulation

2. Guaranteed renewability

3. Income replacement during disabilities

4. Lower premium rates

The correct answer is: Income replacement during disabilities

Disability income policies are primarily focused on providing financial support in the event of a disability that prevents an individual from working. This is the fundamental aspect that differentiates them from other types of insurance. When a policyholder becomes disabled, these policies replace a portion of their lost income, ensuring that they can continue to meet their financial obligations despite their inability to work. While features such as guaranteed renewability and cash value accumulation may be present in some insurance products, they are not exclusive to disability income policies. Cash value accumulation, for instance, is more commonly associated with permanent life insurance products rather than disability coverage. Additionally, lower premium rates can vary widely among different insurance types and do not distinctly define the purpose of disability income policies. The primary purpose of disability income insurance—to replace lost income—makes option C the key differentiator, underscoring the essential function of this type of coverage in the realm of insurance products.