Loss Of Income

What Does Loss Of Income Mean?

Loss of income refers to the situation where a person’s primary source of money, such as a salary from a job or income from a business, is interrupted or terminated. This financial risk can be mitigated through insurance coverage.

Insuranceopedia Explains Loss Of Income

If a person loses their job or their business goes bankrupt, and these were their primary sources of income, they have experienced a loss of income. If they have purchased insurance to cover this risk, they will receive compensation from their insurer.

Income protection insurance helps meet the policyholder’s financial needs when they are unable to work due to disability. This coverage is often sold as disability insurance, and it pays out a percentage of the worker’s earnings while they recover. For a temporary disability, the insurer will provide compensation until the insured can return to work. In the case of a permanent disability, the insurer will cover not only daily expenses but also medical needs.

If a business closes, loss of income insurance can assist the policyholder in paying off debts and even help revive their business. How much an owner pays for small business insurance depends on the industry and the size of the company, which affects how much loss-of-income protection they can build into a policy.