Application Question - Income protection insurance

a. Under an income protection policy, Ellen Tucker, who has been disabled, is receiving $4000 a month. Ellen has made a good recovery and is now able to resume some duties. Her salary while working reduced hours is $4000 per month, whereas her pre-accident salary was $6000 per month. What partial disability benefit would be paid under the policy?

b. Danni is earning $8000 per month and takes out a fixed benefit (agreed value) income protection policy for 60% of her monthly income. Six months after commencing the policy her income falls to $6000 per month. After several months of earning $6000 per month she falls ill and is unable to work. (1) What will be the monthly benefit under the policy? (2) If Danni had an indemnity policy rather than a fixed benefit policy what would be the monthly benefit under the policy?

Learning objective 2, 3