Maggie likes the idea of disability insurance but really hates how much it costs. Which of...

Maggie likes the idea of disability insurance but really hates how much it costs. Which of the following policies would be the least expensive?

A : One that covers 60% of salary for up to 5 years.
B : One that covers 50% of salary for up to 5 years.
C : One that covers 50% of salary for up to 2 years.
D : One that covers 60% of salary for up to 2 years.

Expert Solution

Insurance premium are maximum if they cover more of the payment. Also they are costly when the payment is to be made by the insurance company is for a longer period of time.

A policy covering 60% of the salary will surely be more expensive than the policy covering 50% of the salary as the payment is comparatively more than the one before.

Also a policy which have to for longer period of time say 5 years will be costly than the shorter period one say 2 years

Hence the correct answer is one that covers 50% of the salary for upto 2 years

Correct option is C

ekkarill92 answered 2 years ago

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