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Peter is a bank manager who earns $10,000 per month. He has a disability-income policy that pays total-disability benefits of $8,000 per month in case
Peter is a bank manager who earns $10,000 per month. He has a disability-income policy that pays total-disability benefits of $8,000 per month in case of total disability. The policy also includes a residual disability provision, which pays for residual disability on a pro rata basis.
One day, Peter had a car accident, and he was severely injured. Peter never fully recovered. Although Peter was still able to return to work after some recovery, he was unable to fulfill all his duties at work. Thus, because of his injury, his income was reduced to $6,000 per month.
How much will his disability-income policy pay Peter? Show your work.
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