Giovanni and Vittoria are a middle-aged working couple with one daughter in university. Giovanni is a...
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Giovanni and Vittoria are a middle-aged working couple with one daughter in university. Giovanni is a carpenter and Vittoria is a nurse who works part-time. Neither Giovanni nor Vittoria have employer plans or group coverage and they approach you about disability insurance. They qualify for disability insurance with a combined monthly benefit of $4,000. You discuss riders that can be added and they want their coverage to be protected from inflation. A rider is added which, after the first year of claim, the benefit is indexed to the rate of inflation, on a compound basis, based on the Consumer Price Index (CPI) of the previous year. The rider has a maximum index rate of 5% but allows a carry- forward of unused indexing. Which of the following statements is correct? If the Consumer Price Index (CPI) is 5% in year 2 and 7% in year 3, 2% indexing may be carried forward. If the Consumer Price Index (CPI) is 4% in year 2 and 6% in year 3, 1% indexing may be carried forward. If the Consumer Price Index (CPI) index is 4% in year 2 and 6% in year 3, there is no indexing that may be carried forward. If the Consumer Price Index (CPI) index is 3% in year 2 and 5% in year 3, 1% indexing may be carried forward Giovanni and Vittoria are a middle-aged working couple with one daughter in university. Giovanni is a carpenter and Vittoria is a nurse who works part-time. Neither Giovanni nor Vittoria have employer plans or group coverage and they approach you about disability insurance. They qualify for disability insurance with a combined monthly benefit of $4,000. You discuss riders that can be added and they want their coverage to be protected from inflation. A rider is added which, after the first year of claim, the benefit is indexed to the rate of inflation, on a compound basis, based on the Consumer Price Index (CPI) of the previous year. The rider has a maximum index rate of 5% but allows a carry- forward of unused indexing. Which of the following statements is correct? If the Consumer Price Index (CPI) is 5% in year 2 and 7% in year 3, 2% indexing may be carried forward. If the Consumer Price Index (CPI) is 4% in year 2 and 6% in year 3, 1% indexing may be carried forward. If the Consumer Price Index (CPI) index is 4% in year 2 and 6% in year 3, there is no indexing that may be carried forward. If the Consumer Price Index (CPI) index is 3% in year 2 and 5% in year 3, 1% indexing may be carried forward
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Answer The option C is correct If the Consumer Price Inde... View the full answer
Related Book For
Federal Taxation 2016 Comprehensive
ISBN: 9780134104379
29th edition
Authors: Thomas R. Pope, Timothy J. Rupert, Kenneth E. Anderson
Posted Date:
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