Sidney makes $3,000 a month as a machine shop supervisor. His disability income policy provides for a monthly payment of $2,500 in the event of total disability. If Sidney were to become partially disabled, but continued to work at 60% of his pay, what would the policy pay, assuming it had a residual disability provision?A) $1,200 a month.B) $0, since Sidney was not fully disabled.C) $1,000 a month.D) $2,500 a month.
Answer: CA residual disability income policy ties the benefit payments directly to the proportion of actual earnings lost. In this problem, since Sidney is earning 60% of his predisability pay, the residual benefit would be 40% of the full benefit, or $1,000, calculated as .40 x $2,500.