Final answer:
Orlando will receive $5,300 from his disability insurance policy after Social Security benefits begin because the insurance payout is offset by the amount he receives from Social Security. The correct answer is option B.
Step-by-step explanation:
Orlando purchased a disability insurance policy with a base benefit and a specified Social Security Income (SSI) offset benefit. The base benefit is $5,000, and the SSI offset benefit is $1,000. If Orlando becomes disabled and is eligible for Social Security disability benefits, the amount he receives from his insurance policy will be reduced by the SSI offset amount, as it is assumed that he would receive this from Social Security.
When Orlando receives $700 in Social Security disability benefits, which is less than the SSI offset benefit of $1,000, the amount from the insurance company will be calculated by subtracting the actual Social Security benefit received from the SSI offset amount. Then add the remaining offset to the base benefit:
Insurance company benefit calculation:
$5,000 (base benefit) + ($1,000 (SSI offset benefit) - $700 (actual Social Security benefit received)) = $5,300.
Hence, after Social Security benefits begin, Orlando will receive $5,300 from the insurance company. The correct answer is option B.