Question

Orlando buys a disability policy with a base benefit of $5,000 and an SIS offset benefit of $1,000. Orlando becomes disabled and eventually received $700 in Social Security disability benefits. How much will Orlando receive from the insurance company after Social Security benefits begin?

a. $5,000
b. $5,300.
c. $5,700
d. $6,000

Answer 1

Orlando will receive $5,300 from the insurance company after his Social Security benefits begin, which includes his base benefit and the remaining SIS offset benefit after the Social Security payment is deducted.

Step-by-step explanation:

Orlando has a disability policy with two benefits: a base benefit of $5,000 and an Social Security Income (SIS) offset benefit of $1,000. After becoming disabled, Orlando receives a $700 benefit from Social Security. This means that Orlando's total benefit from the insurance policy will be reduced by the amount he receives from Social Security, but only up to the amount of the SIS offset benefit.

To calculate the actual amount he receives from the insurance company, subtract the Social Security payment ($700) from the SIS offset benefit ($1,000): $1,000 - $700 = $300. This amount ($300) will be added to the base benefit. So, Orlando's final payment from the insurance company is the base benefit ($5,000) plus the remaining SIS offset benefit ($300).

Orlando's final payment from the insurance company after Social Security benefits begin is $5,300.