Chapter 9 Critical Thinking Case 2: Valeria and Matias Rivera Evaluate Their Disability Income Needs
Matias earns a monthly take-home pay of $4,800. Matias and his family are entitled to receive the benefits provided by the company's group health insurance policy. In addition to major medical coverage, the policy provides a monthly disability income benefit amounting to 20 percent of the employee's average monthly take-home pay for the most recent 12 months prior to incurring the disability. (Note: Matias' average monthly take-home pay for the most recent year is equal to his current monthly take-home pay.) In case of complete disability, Matias would also be eligible for Social Security payments of $1,300 per month.
Valeria is also employed. She earns $1,500 per month after taxes by working part-time at a nearby grocery store. As a part-time employee, the store does not provide her with any benefits. Should Matias become disabled, Valeria would continue to work at her part-time job. If she became disabled, Social Security would provide a monthly income of $700. Valeria and Matias spend 90 percent of their combined take-home pay to meet their bills and provide for a variety of necessary items. They use the remaining 10 percent to fulfill their entertainment and savings goals.
1. How much, if any, additional disability income insurance does the Rivera family require to ensure adequate protection against Matias becoming completely disabled? Use Worksheet 9.2 to assess his needs. Assume that Matias and Valeria would like to have 100% of their combined take-home pay.
2. Does Valeria need any disability income coverage? Assume that Matias and Valeria need 90% of their combined take-home pay in order to meet their bills and provide for a variety of necessary items.
-Select-
Explain.
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3. What specific recommendations regarding disability income insurance would you give Valeria and Matias to provide adequate protection for themselves and their child?
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