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It's important to understand the definition of residual disability. In insurance language, residual disability normally refers to a partial disability. Some situations involve a partial disability claim at the beginning and/or end of a temporary disability that may, during the process, fit the definition of total disability. Your injury or illness may, at first, result in a residual disability, move to total disability, and, as you recover, return to a partial disability claim as you become able to resume the duties of some, but not all, of your occupation requirements.
Your benefits in a residual disability claim will be a percentage of the benefits payable in a total disability situation. For example, assume your current or proposed coverage stipulates that you are entitled to a monthly benefit maximum of $7,500 if you are totally disabled, whether temporary or permanent. You suffer a residual (partial) disability that results in a 40% loss of regular monthly income. You may be eligible to receive a monthly disability income benefit of 40% of your policy maximum, or $3,000.
There are often two definitions of residual disability and you should be aware of the difference. One, usually preferred, is the loss of income provision which operates much like the example above. Another, often called the “loss of time and duties”, contains language that relates to your inability to spend time at your specialty and/or your inability to complete some of the duties related to your occupation. This language can complicate the process to calculate permanent partial disability or other form of residual disability benefit levels. Examine your coverage to learn how residual disability is determined. Should you not have this provision, you may be able to add coverage through a rider to your main contract.
Refer to your insurance policy contract for specific information regarding your coverage and for actual terms, conditions and exclusions. The above statements are general in nature and may or may not reflect the actual terms of your insurance policy.
|Jennifer Mathes, Ph.D.|