Description
- See attached file for detailed instructions.
- Submit 1 file: a Word file containing your report.
Unformatted Attachment Preview
RISK MANAGEMENT: PROJECT 1 – DISABILITY INSURANCE
1. LEARN ABOUT LONG-TERM DISABILITY
1.1 Study the Relevant Facts
Go to www.disabilitycanhappen.org/overview/ to learn about the risk of long-term disability, the common
causes of long term disability, and the current disability statistics. Go through the Overview, Common
Causes, and Disability Statistics tabs to get all the information you need.
2. EARNABLE INCOME QUOTIENT (EIQ) AND PERSONAL DISABILITY QUOTIENT (PDQ)
2.1 Estimate Your Future Earnings
Go to www.bls.gov/oes/current/oes_nat.htm to get an estimate of your future salary after you graduate
and get the job that you hope to get. For instance, if you are a finance major and hope to become a
personal financial advisor, the annual mean wage for this profession is $119,290.
2.2 Calculate Your EIQ
Go to www.whatsmyeiq.org and use the EIQ calculator. In the calculator, use the salary estimate from the
previous step, leave salary growth at 3%, and use 65 as retirement age. Below is an example of how the
output will look like.
2.3 Calculate Your PDQ
Once you see you EIQ, click on the link circled in the above screenshot to be taken to the PDQ calculator.
Once you go through all the steps in the calculator, your PDQ will be displayed. Below is an example of
how the output will look like. Save a screenshot of your own output – you will be putting that into
your report.
3. DISABILITY INSURANCE QUOTE
3.1 Get an Insurance Quote
Go to www.policygenius.com/disability-insurance/survey/basics and get a disability insurance premium
quote. Here are some guidelines for selecting the parameters of your quote:
(1) For your occupation, select the occupation you hope to be working in after you graduate and use
1 as the number of years in this occupation; for your income, use the BLS annual mean wage for
your occupation from Part 2.1.
(2) Select monthly benefit amount equal to the maximum allowable coverage (this should be the
default, but you can drag the selector all the way to the right to make sure); choose “yes” to
expected income increases.
(3) Select a waiting period of 90 days (this should be the default).
(4) Select benefit period up to age 65 (this should be the default).
(5) Choose “yes” to own occupation coverage, residual disability coverage, and making the policy
non-cancelable.
Your quote will look similar to the screenshot below. Save a screenshot of your own quote – you will
be putting that into your report.
3.2 Determine How Certain Parameters Affect Your Premium Quote
On the premium quote page, change the following parameters (one by one) and record how the quote
range changes.
(1) Reduce the benefit amount by half. What is the new quote range? Is it exactly half of the original
range? Why or why not? Return the benefit amount back to the original value.
(2) Change the waiting period to 180 days. What is the new quote range? Since the waiting period
doubled, are you surprised that the quote range was not cut in half? Return the waiting period
back to the original value.
(3) Uncheck the Own Occupation Coverage rider. What is the new quote range? Why did the quoted
premium decrease?
3. REPORT AND SUBMISSION
3.2 Create a Report
Start a new Word document. (1) Insert the screenshot with your EIQ and PDQ. (2) Insert the screenshot
with your disability insurance quote. (3) Answer questions in part 3.2 (no additional screenshots are
needed – simply type up your answers).
3.2 Submit on Blackboard
Submit your project on Blackboard under Projects. For you submission, upload your Word report
document. You must submit by the deadline indicated on Blackboard. You can only submit once (make
sure everything is correct before submitting). Late submissions will result in a zero grade.
Purchase answer to see full attachment
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User generated content is uploaded by users for the purposes of learning and should be used following Studypool's honor code & terms of service.
Explanation & Answer
Hi,Please find attached the solution.
Estimated Future Earnings
EIQ and PDQ
Disability Insurance Quote
(1) – Reducing the benefit amount results in a new quote range of $91 - $124 per month. The new
quote range is exactly h...
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