Question

Julie Rios has​ take-home pay of $1,600 per month and a disability insurance policy that replaces 60% of earnings after a​ 90-day (3-month) waiting period. She has accumulated 80 sick days at work. Julie was involved in an auto accident and was out of work for four months.

How much income did she​ lose, and how much would be replaced by her disability​ policy?

How else could she replace her lost​ earnings?

If after four months Julie could only return to work​ half-time for an additional three months due to continuing physical​ therapy, how might she benefit from a residual benefits​ clause?

How much will she receive in disability benefits for this​ period?

No additional information provided

Answer 1

Before applying sick day benefits and disability income benefits, Julie would lose

$1600*4 = $6400 of income.

She was out of work for 4 months, so the amount of income Julie's disability policy would replace is 60% of 1 month salary = $960

Some ways that she could replace her income include:

• Short-term disability policy benefits, if available.
• An emergency fund of 3 to 6 months of expenses.
• Availing accumulated "Sick days"

The residual benefit is calculated by taking the amount of income loss (which is 50% in this case, since she was able to work only half time) and multiplying it by the normal disability benefit. For example,If the disability policy pays out $X a month as normal benefits. then She could benefit 50% of $X per month.