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CMFASPrepStudyingRES5
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Financial advisory
RES5Financial Advisory Services✓Eddy was insured for a total disability benefit of S$6,000 a month (75% of his S$8,000 salary) with a 3% per annum escalation benefit. After a full year of continuous disability his benefit escalated, and he then returned to work in a new job paying S$2,000 a month. Applying the standard partial disability formula to the escalated benefit, his monthly partial disability benefit is:
After one year the benefit escalates to S$6,000 + (3% x S$6,000) = S$6,180. The partial benefit = (Pre-disability - Present) / Pre-disability x escalated benefit = (8,000 - 2,000)/8,000 x 6,180 = 0.75 x 6,180 = S$4,635.
Apply the earnings fraction to the escalated benefit (S$6,180), not the original S$6,000 (which gives S$4,500).
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