Giovanni and Vittoria are a middle-aged working couple with one daughter in university. Giovanni is a carpenter and Vittoria is a nurse who works part-time. Neither Giovanni nor Vittoria have employer plans or group coverage and they approach you about disability insurance. They qualify for disability insurance with a combined monthly benefit of $4,000. You discuss riders that can be added and they want their coverage to be protected from inflation. A rider is added which, after the first year of claim, the benefit is indexed to the rate of inflation, on a compound basis, based on the Consumer Price Index (CPI) of the previous year. The rider has a maximum index rate of 5% but allows a carry-forward of unused indexing. Which of the following statements is correct?

a)If the Consumer Price Index (CPI) is 5% in year 2 and 7% in year 3, 2% indexing may be carried forward

.b)If the Consumer Price Index (CPI) is 4% in year 2 and 6% in year 3, 1% indexing may be carried forward

.c)If the Consumer Price Index (CPI) index is 4% in year 2 and 6% in year 3, there is no indexing that may be carried forward.

d)If the Consumer Price Index (CPI) index is 3% in year 2 and 5% in year 3, 1% indexing may be carried forward