An insured has a $1,000 monthly disability benefit with a 90-day elimination period. If disabled for 120 days, the benefit paid is

Rationale

$1,000 monthly disability benefit will pay $1,000 after 120 days of disability.

The insured's disability benefits begin after the 90-day elimination period. Since the individual has been disabled for 120 days, they qualify for one full month's benefit of $1,000.

A ($0) YOUR ANSWER

This option suggests no benefit is paid, which is incorrect. Although there is a 90-day elimination period, once that period is surpassed, the insured becomes eligible for benefits. Since they were disabled for 120 days, they are entitled to receive the benefit.

B ($1,000) CORRECT

After the elimination period of 90 days, the insured is eligible for their monthly benefit. Since they were disabled for 120 days, they qualify for one full month’s benefit, which amounts to $1,000.

C ($3,000) YOUR ANSWER

This choice implies that the insured would receive benefits for three months. However, since the insurance policy only pays after the 90-day elimination period, and the insured has only been disabled for 120 days, they are eligible for just one month’s benefit of $1,000.

D ($4,000) YOUR ANSWER

This option incorrectly assumes the insured would be entitled to four months of benefits. However, the elimination period means benefits only commence after 90 days of disability, and since the insured was disabled for only 30 days beyond that period, they are entitled to a single $1,000 benefit.

Conclusion

The insured's eligibility for benefits begins after the 90-day elimination period. Since they were disabled for 120 days, they qualify for one full month's benefit of $1,000. Thus, the only correct answer reflects the single month of payment due to the completion of the elimination period.

An insured has a $1,000 monthly disability benefit with a 90-day elimination period. If disabled for 120 days, the benefit paid is

$1,000 monthly disability benefit will pay $1,000 after 120 days of disability.

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