What is the primary function of disability insurance?

The primary function of disability insurance is to replace lost income when an individual is unable to work due to a disability. This type of insurance serves as a financial safety net, ensuring that individuals can maintain their standard of living when they face a temporary or permanent loss of income due to a medical condition or injury that prevents them from performing their job duties. By providing a portion of the insured’s income—typically a percentage of their pre-disability earnings—disability insurance helps support ongoing living expenses such as rent or mortgage payments, utilities, food, and other necessities during the period of disability.

Other options offered do not align with the primary purpose of disability insurance. For instance, lump sum payments upon death are associated with life insurance, while covering living expenses after retirement pertains to retirement savings or pensions rather than disability plans. Focusing solely on medical expenses overlooks the broader financial implications of being unable to work, as the main goal is to replace lost income rather than paying for specific medical costs. Thus, option C accurately captures the essence of what disability insurance is designed to accomplish.