4.One of your clients just realized that her own-occupation disability policy has a Social Security benefits integration clause, meaning that the policy will have a dollar-for-dollar reduction in benefits paid if she qualifies for Social Security disability payments. According to her most recent Social Security benefits statement, she is eligible for $1,325 per month for a permanent and total disability. How much will her disability policy pay as a monthly benefit under the following circumstances if her current annual salary is $62,000, her policy pays 70 percent of gross income, and she pays for the policy with after-tax dollars?

a.Her disability meets the definition for her policy, but it does not meet the Social Security definition.

b.Her disability meets the definition for her policy and meets the Social Security definition.

c.How much will her total combined monthly disability benefits equal if she meets both definitions of disability and her policy does not have a benefits integration clause? Why can this be problematic? In other words, why might this create moral hazard?