Question

Allen has a disability income policy with a $2,500 monthly benefit and a 30-day elimination period. He is unable to work 90 days following an automobile accident. What will the policy pay?

- A) Full benefit for the entire period
- B) No benefit due to the elimination period
- C) Partial benefit for the first 30 days
- D) Reduced benefit for the entire period

Answer 1

The correct answer is that Allen will receive the full disability benefit for 60 days after the 30-day elimination period, which amounts to a total of $5,000.

Step-by-step explanation:

Based on the details provided, Allen has a disability income policy with a $2,500 monthly benefit and a 30-day elimination period. The elimination period is the time frame after a disabling event in which benefits are not paid. Since Allen is unable to work for 90 days following his accident, his disability policy would start paying benefits after the elimination period has ended.

Therefore, the policy would not pay for the first 30 days. However, for the remaining 60 days (which is the 90 days total less the 30-day elimination period), Allen would receive the full monthly benefit of $2,500. This means the correct answer to the question is Allen will receive the full benefit for 60 days after the elimination period, resulting in a total payout of $5,000 (2 months at $2,500 per month).