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Bonnie and Clyde are married and have purchased a comprehensive major medical policy which covers them and their two sons, Smith and Wesson. The policy has a $500 calendar year family deductible, a $2,500 stop-loss provision, and an 80% co-insurance clause. The following losses occur: On January 1, 2013 Bonnie was treated for an infection at a cost of $200, on July 1, 2013 Smith was treated for an injury suffered while waterskiing at a cost of $10,000, on December 5, 2013 Clyde underwent eye surgery at a cost of $1,500, and on January 5, 2014 Wesson was treated for a broken leg at a cost of $2,000.

How much will the insurer pay for each of these losses?

Financial Management, Finance

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