Disability income insurance

What this page covers

The Texas General Lines Life & Accident/Health exam (InsTX-LAH05) outline in force on or after 1 September 2026 puts 16 scored questions under Types of Policies for accident and health. These unofficial notes stay with V.A Disability income: individual DI, business overhead expense, business disability buyout, group DI, and key-employee disability. They are not exam questions, not a prelicensing course, and not affiliated with Pearson VUE, TDI, or NAIC. Passing is not guaranteed.

Disability income pays a periodic cash benefit when the insured cannot work because of a qualifying sickness or injury. It is not medical-expense insurance. It does not pay hospital bills. The testers want you to sort who is the insured, who receives the check, whether the contract replaces personal income or a business expense, and how the definition of disability plus the elimination period control when money starts.

V.A.1 Individual disability income

An individual DI policy is owned by the insured (or a personal trust). Benefits are a monthly indemnity, usually a fraction of earned income, not a reimbursement of bills. Own-occupation definitions pay if the insured cannot perform the duties of their regular occupation even if they can do other work. Any-occupation definitions pay only if the insured cannot perform any occupation for which they are reasonably fitted. Many contracts use own-occ for a limited period and then switch.

The elimination (waiting) period is a time deductible: no monthly benefit until the insured has been disabled that long. A longer elimination period lowers premium. The benefit period is how long monthly payments can continue (for example two years, five years, or to age 65). Presumptive disability — typically loss of sight, hearing, speech, or use of two limbs — may waive the usual definition and the elimination period when the contract says so.

Partial or residual disability riders pay a reduced benefit when the insured returns to work at reduced hours or reduced earnings. Recurrent disability language treats a same-or-related disability that returns within a stated window as a continuation of the prior claim, so a new elimination period is not imposed.

V.A.2–5 Business DI: BOE, buyout, group, and key employee

Business overhead expense (BOE) reimburses covered fixed business expenses — rent, utilities, employee wages, not the owner's personal salary — while the owner is disabled. The benefit period is usually short (12–24 months). The point is to keep the doors open, not to replace household income.

A business disability buyout (buy-sell) funds a buy-sell agreement when a partner or shareholder is disabled for a stated period. The benefit is often a lump sum or a short installment to the remaining owners so they can buy the disabled owner's interest. It is not a monthly living benefit for the disabled person.

Group disability income is an employer-sponsored plan, often short-term (weeks to months) plus long-term (after a longer elimination period). Benefits are a percent of pre-disability earnings, commonly offset by Social Security disability or workers' compensation. Group contracts are typically less portable and use any-occupation language sooner than a well-designed individual policy.

Key-employee (key-person) disability insures a business against the loss of a crucial worker. The business owns the contract, pays the premium, and receives the benefit. The money is meant to recruit a replacement or cover lost profit — not to pay the key person's household bills. If a stem names the business as beneficiary on a living person's disability, look here or at BOE; if the check is meant for the disabled person's groceries, look at individual or group DI.

Study cues

Ask four questions on every DI stem: whose income or expense is being replaced; who owns the contract; is the benefit indemnity or reimbursement of named expenses; and which definition plus elimination period applies. Individual DI replaces personal earned income. BOE reimburses overhead. Buyout funds an ownership transfer. Key-person pays the business. Group DI is an employee benefit with offsets.

Do not treat these notes as official study material from any testing vendor or regulator. After you can place each of the five designs without looking, drill the L&AH topic set and take the unofficial timed mock. Passing is not guaranteed.