What is the formula for calculating the monthly income benefit?

The formula for calculating the monthly income benefit is accurately represented by taking 115% of the average monthly salary credit and multiplying it by the replacement ratio. This method provides a clear framework for determining what an individual will receive based on their previous earnings and the agreed-upon replacement ratio, which reflects the percentage of income that the benefits will replace upon the occurrence of a claim.

In this context, the component parts are significant: the average monthly salary credit gives a standardized figure related to the individual's earnings, and the replacement ratio calibrates that figure to ensure it reflects an appropriate level of benefit compared to what the individual was earning before the qualifying event. This formula takes into account both salary history and the benefit determination process, which is essential for providing a fair and adequate income replacement.

Other options do not comprise the correct elements to calculate monthly income benefits, either focusing on total credits, the average salary without considering service length, or being solely based on last year’s earnings without incorporating the essential components of average monthly salary and replacement ratios.