1. From the Hurleys€™ point of view, discuss the relative merits of each policy. Which would you recommend?
2. Which policy provides the better inflation protection? Why?
3. Do these policies provide adequate income replacement for the Hurleys?
4. Suppose the Hurleys must limit the amount spent on disability insurance to the cost of these policies. Are there any changes in coverage that might lower their risk without increasing their premiums? Explain.
The Hurleys have narrowed their choice of disability insurance for Mr. Hurley down to two policies. They cost the same and are identical except for those differences outlined in the following table. They are guaranteed renewable and have an elimination period of 30 days.

Mr. Hurley is currently 35 years of age with two children. Over the next 10 years his child-rearing responsibilities should end. His current job pays $60,000 a year and is covered by Social Security. He calculates potential family disability benefits from Social Security at about $2,500 a month while the children are still at home. He is currently in line for an upper-level management position. Should he get it, his salary will increase substantially.

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Maximum monthly benefit Benefit period Maximum replacement from all sources Policy1 $4,000 10 years lesser of $4,000 a month, Policy 2 $3,000 To age 65 60% of income or 60% of income