Question

Which of the following statements is not true of disability insurance?

A) You should have it even if you are retired and living on a pension.
B) The amount of coverage should equal your disposable income.
C) If you are self-employed you should have disability insurance.
D) All of the above are true of disability insurance.

Answer 1

Statement A) 'You should have it even if you are retired and living on a pension' is not true for disability insurance as the income from pensions generally continues regardless of health status.

Step-by-step explanation:

Here is why:

• When you retire and live on a pension, the purpose of disability insurance, which is to replace lost income due to an inability to work, is no longer relevant since retirement income through pensions or social security typically continues irrespective of health status.
• The amount of coverage for disability insurance often should reflect your earning potential, not necessarily your disposable income, thus making statement B) also potentially incorrect depending on specific circumstances.
• Statement C) is true because if you are self-employed, you don't have an employer's benefits to fall back on, so acquiring disability insurance is important to cover your income in case of a disability.