How Residual Disability Insurance Protects Your Income

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  • Residual disability pays part of your salary if you can't work as much as you used to because of an injury or illness. Find out how this coverage works.

You might qualify for residual disability insurance benefits if you can return to work part-time and/or with reduced job duties after an illness or injury. You'll receive a percentage of your policy's full disability benefit to cover the gap in earnings associated with the decreased workload. You can buy residual insurance as a separate policy or as a rider on your disability coverage.

Who Is Eligible for Residual Disability?

If you lose part of your income because of your illness or injury, you can recover from this financial loss with residual disability insurance. For example, if you can only work three days a week instead of five, your policy will pay 40% of your weekly salary to make up for the lost income. 

insurance policy will define full and partial disability. Generally, you'll receive full disability benefits instead of residual benefits if you can't do any of your job duties. Most short-term disability policies cover your entire salary for the time you're out of work. 

Residual benefits might expire after a designated time period even if you can't return to work, at which point you may be eligible for Social Security Disability Insurance. If a worker loses limbs, hearing or vision, the insurance company typically presumes total disability. This means they won't be able to return to work.

What's the Difference Between Basic and Enhanced Residual Disability?

Most insurance companies offer two levels of residual disability: basic and enhanced. The enhanced policy pays a higher percentage of your salary than the basic policy, but the exact terms vary by provider.  Also, enhanced coverage typically pays benefits even if you enter a different career while basic coverage usually requires that you stay in the same job to receive payments.

What's the Difference Between Partial and Residual Disability?

Residual disability is often confused with partial disability. While both policies pay a percentage of your salary to cover lost income, partial disability generally only lasts for 6 months. Residual disability policies expire when you turn 65, at which point you can receive Social Security income. 

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