Advanced Diploma of Financial Planning (ADFP) Practice Test

Disable ads (and more) with a membership for a one time $2.99 payment

Excel in the Advanced Diploma of Financial Planning Test with comprehensive quizzes. Study with detailed questions, hints, and explanations. Prepare for success now!

Each practice test/flash card set has 50 randomly selected questions from a bank of over 500. You'll get a new set of questions each time!

Practice this question and more.

What does disability income insurance provide?

A one-time lump-sum payment
A regular income while unable to work
Full retirement benefits after a fixed period
Payment only for temporary injuries

The correct answer is: A regular income while unable to work

Disability income insurance is designed to provide individuals with a continuous source of income if they are unable to work due to an illness or injury. This type of insurance replaces a portion of the lost wages, which allows recipients to meet their financial obligations and maintain their living standards during the period of disability. The focus on providing a regular income highlights the importance of financial stability for those who are temporarily or permanently unable to earn a living due to their condition. Each policy may have specific terms regarding the duration of coverage and the percentage of income replaced, but the core function remains the same: to safeguard against the loss of income due to a disabling event. Other options do not align with the primary function of disability income insurance. A lump-sum payment does not cater to ongoing financial needs during a period of incapacity. Full retirement benefits are unrelated to disability and typically do not begin until a person reaches retirement age. Finally, limiting payments only to temporary injuries does not reflect the comprehensive nature of disability income insurance, which can encompass a wide range of qualifying conditions, both temporary and permanent.