General Insurance✓ Verified · outline & fact-checked · Sep 2026Difficulty 2/5
For an applicant seeking disability income insurance, the insured's earning power represents:
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Answer & full 3-part explanation (select an option above, or peek)
Why A is correct
Disability income insurance protects a specific loss exposure: the insured's ability to earn income. If disability interrupts earnings, the insured suffers a financial loss, so earning power is the asset at risk. This is why benefit amounts are limited to a percentage of income — the insurer indemnifies the exposure, not a speculative windfall.
Why the other options are wrong
- B) The peril is the sickness or accident causing disability, not the earning power itself.
- C) Earning power is an economic asset at risk, not a physical condition increasing loss.
- D) Consideration is the premium and the insurer's promise, not the insured's income.
Memory hook
Disability insurance guards your paycheck, the true asset at risk.