Question

Christine's total monthly expenses typically amount to $1,800. About $50 of these expenses are work related. Her employer provides disability insurance coverage of $600 per month. How much individual disability insurance should Christine purchase?

Answer 1

Christine should purchase individual disability insurance coverage for $1,150 per month to cover her monthly expenses minus the employer's disability insurance coverage and work-related expenses.

Step-by-step explanation:

To determine how much individual disability insurance Christine should purchase, we start with her total monthly expenses of $1,800. Since $50 of these expenses are work-related, and her employer provides $600 of disability insurance coverage, we can calculate the shortfall that Christine needs to cover with individual insurance.

First, we subtract the employer-provided disability insurance coverage from the total monthly expenses:

$1,800 - $600 = $1,200.

Then we further subtract the work-related expenses since they would not be necessary if Christine is off work due to disability:

$1,200 - $50 = $1,150.

Therefore, Christine should consider purchasing individual disability insurance coverage for the remaining amount of $1,150 per month to cover her monthly expenses if she becomes disabled.

Answer 2

She should purchase a disability insurance if $1,150

Step-by-step explanation:

To calculate the amount of individual disability insurance she should purchase, we use the mathematical equation below;

Required amount of disability insurance = Monthly income - work related expenses- Employer’s contribution

From the question

Monthly income = $1800

Work related expenses = $50

Employer’s contribution = $600

Substituting these values, we have;

1800-50-600 = $1,150