Pure Loss of Income (Income Replacement) Policy

A loss of income insurance policy, also known as an income replacement policy, is designed to provide financial protection for individuals who experience a decrease in income due to illness, injury, disability, or unforeseen circumstances. This type of policy pays a replaceable amount of income usually equal to the policyholder’s current gross income, or a percentage of it, in the event of a partial or total loss of income. It helps policyholders to cover their living expenses and bills if any of the insured events occurs.

In general, such policies provide financial coverage when a regular source of income of the policyholder is either stopped due to disability, illness, unemployment or an accident. This policy replaces the lost income and provides financial security during the time when the policyholder cannot continue their job or income generating activities. Policies that provide income replacement are generally offered through employers and can include things like disability insurance, unemployment insurance, and long-term disability insurance.

These policies often provide coverage for a specific amount of time, and the amount of money paid out in the event of a loss of income is outlined in the policy details. In general, income replacement policies provide coverage for lost income that exceeds the policyholder's normal income. The policy may also include additional coverage to help with expenses that would not be covered by lost income such as medical bills, funeral costs, and any other differential expense associated with the loss of income.

Income replacement policies provide an important form of financial security for individuals who experience the unexpected loss of income. This type of insurance policy can help to ensure that a person is able to maintain their current standard of living, even when their normal salary is no longer available.

Pure Loss of Income Policy - Insured receives benefits if loss of income is due to covered accident or sickness + Applies even if insured is able to work full-time doing all the same duties as before - Insured is eligible based solely on a loss of income - Typically paid monthly