Loss of Income
Definition - What does Loss of Income mean?
Loss of income refers to the situation in which a person's source of money for expenses or lifestyle, such as salary from a job or income from a business, is terminated. This financial risk can be covered by insurance.
Insuranceopedia explains Loss of Income
If a person loses their job or their business goes bankrupt and if either of these sources of income is their way of supporting themselves financially, then they have suffered a loss of income. If they have purchased insurance against this risk, they will receive some compensation from their insurer.
Income protection insurance will provide for the policyholder's financial needs when they are unable to work because of a disability. If it is temporary, the insurer will provide insurance money until the insured can resume working. If it is a permanent disability, however, the insurer will provide not only for daily expenses but also medical needs.
If a business closes, loss of income insurance will help the policyholder pay off their debts and even resuscitate their business.