Question

Rowen has a disability income policy that pays a monthly benefit of $3,000. rowen has been disabled for 60 days, but she only received $1,500 from her disability insurance. which of the following is the probable reason that she only received $1,500?

a. the policy has a deductible of $1,500.
b. the elimination period is 45 days.
c. the policy has a 50% coinsurance clause.
d. rowen is considered to be only 50% disabled.

Answer 1

The reason Rowen only received $1,500 is likely due to an elimination period of 45 days in her disability insurance policy, meaning she is only paid benefits after this period has passed.

Step-by-step explanation:

Elimination Period:

The probable reason Rowen only received $1,500 from her disability insurance is due to an elimination period of 45 days. In disability income policies, an elimination period is a predetermined amount of time that must pass before the insurance company starts paying out benefits to the policyholder. The elimination period functions similarly to a deductible in that it represents a period during which the policyholder must self-insure. If Rowen's policy has an elimination period of 45 days, it means that for the first 45 days of her disability, she would not receive any insurance benefits.

Since Rowen has been disabled for 60 days, she would only be entitled to benefits for the time surpassing the elimination period, which in this case is 15 days. As her monthly benefit is $3,000, prorated for half of the month (since 15 days is approximately half of a 30-day month), she would receive half of that amount, which equals $1,500. This scenario is most consistent with option B, and the other options listed do not fit the circumstances provided, such as a deductible, coinsurance clause, or partial disability.