Sarah, a self-employed graphic designer in Ontario, earns $75,000 annually. She is applying for an individual disability insurance policy. Her advisor, David, explains that the policy offers a 70% income replacement ratio. If Sarah becomes totally disabled, what is the maximum monthly benefit she could typically expect, assuming a standard policy structure?

Question: Sarah, a self-employed graphic designer in Ontario, earns $75,000 annually. She is applying for an individual disability insurance policy. Her advisor, David, explains that the policy offers a 70% income replacement ratio. If Sarah becomes totally disabled, what is the maximum monthly benefit she could typically expect, assuming a standard policy structure?

Answer options: ✅ $4,375

• $5,250
• $7,500
• $3,750

Correct answer: $4,375

Explanation: The maximum monthly benefit is calculated as the annual income multiplied by the income replacement ratio, then divided by 12 months: ($75,000 * 0.70) / 12 = $4,375. This is a common calculation for individual DI.