Most group disability policies calculate the amount of the insured's earnings prior to an accident using which method?

The percentage method is commonly used in group disability policies to calculate the amount of the insured's earnings prior to an accident. This method takes a percentage of the insured's salary or wages, typically while considering any applicable limits or caps established by the policy.

By using a percentage of earnings, the calculation can effectively account for varying salary levels among members of a group, allowing for a tailored approach to providing benefits. This ensures that individuals receive disability payments that are proportional to their income, which can help maintain their standard of living during a period of financial disruption due to a disability.

The other methods, such as the flat rate method or fixed income method, do not provide the flexibility or reflection of actual earnings that the percentage method does. The average income method could also provide some insight into average earnings over a period, but it may not accurately reflect an individual’s specific earnings and situations, which is why the percentage method is favored in most group disability policy calculations.