Problem regarding the disability-income policy

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Jeff currently earns $3000 per month. He has an individual disability-income policy that will pay $2000 monthly if he is totally disabled. Disability is defined in terms of the worker's own occupation. The policy has a 30-day elimination period and also provides residual disability benefits. Benefits are payable until age 65.

a. If Jeff is severely injured in an auto accident and cannot work for four months, how much will he collect under his policy?

b. Assume Jeff returns to work but can only work part-time until he recovers completely. If he earns $1500 monthly, what is the amount, if any, that Jeff can collect under his policy? Explain your answer.

Reference no: EM13969778

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