Here is what I can find in T5.1 on Disability.
Disability Muster Out
Some careers (Scholar, Scout, Merchant, Spacer, Soldier, Agent, Marine) include a provision for Disability Muster Out. When Risk Failure produces an Injury or Wound which reduces the Controlling Characteristic by 4 or more points, the character is Disabled. Page 69, Book 1
Disabled. If the Controlling Characteristic is reduced by 4 points or more, the Character is disabled and must Muster Out at the end of the Term (and is allowed Double Benefits). Page 65, Book 1
I am not sure why Scholar is included in this, as there are instances of disabled scholars, Stephen Hawkings being a prime examples.
Having been retired by the Army in the Real Wrld for disability, I would view it as more changing the character career. You would need some way of determining the nature of the disability to determine what other careers might be available. In the example given, the character lost 7 strength, without specifying what the remaining strength is. An alternative career where strength is not critical should be an option.
As a side note, if a character receives a
Disability Muster Out result, then I would add a house rule for some form of pension for disability in addition to the Double Mustering Out benefits. In the example given, a loss of 7 strength, when a maximum of 4 is allowed, I would allow a pension of either 5,000 Credits per year, based on the Citizen Pension mentioned on Page 69. or 3,000 Credits per year based on the difference between 7 lost verses 4 allowed. As the character was in the Merchant service, I would lean toward the 3,000 Credits, 7 minus 4 times 1,000 Credits. Disability pensions for the military services should be higher ,using a formula of 1 minus (the remaining Characteristic divided by the initial characteristic) times 2,000 Credits, so that the greater the loss, the greater the pension.