Property and Casualty Insurance Practice Exam

Health and Disability Insurance is designed to address which risk?

1. Property loss

2. Medical bills and loss of income

3. Unemployment

4. War risk

The correct answer is: Medical bills and loss of income

Health and Disability Insurance primarily addresses the risks associated with medical expenses and loss of income due to health-related issues. When an individual faces a medical condition that requires treatment, this insurance helps to cover the costs of medical bills, ensuring that the policyholder can receive necessary healthcare without overwhelming financial burden. In addition to covering medical bills, Disability Insurance provides financial support in the event that an individual is unable to work due to illness or injury. This means that if a person's health condition prevents them from earning an income, their disability policy can replace a portion of that lost income, allowing them to maintain their standard of living during challenging times. This focus on health costs and income protection differentiates Health and Disability Insurance from other types of insurance, such as those related to property or specific risks like war or unemployment. Property insurance is geared towards physical assets while unemployment coverage addresses job loss rather than health-related income loss. Hence, the correct understanding of Health and Disability Insurance centers on medical bills and the financial repercussions of being unable to work due to health issues.