Residual Disability Coverages and Benefits
Many disability insurance policy include residual coverage. If yours does not, consider renegotiating your policy so that it does or ad an additional rider or supplemental coverage to include residual coverage. As you’ll see, it can be an important factor.
The basis of a residual claim is that the person covered is still able to perform some or most of their occupational duties, but a substantial loss if income is still present because of a disability.
Residual coverage means any coverage that is not for the full benefit. For instance, if you suffer sickness that causes you to lose some of your occupational skills (the ability to perform them) so that you lose 20% of your income, residual disability coverage will pay some of all of that difference.
Further, residual coverage also covers the times in the beginning and end of your insurance benefits. In fact, most disability claims will start or end (or both) with a residual claim.
As an example, Ray is a lawyer whose work is mostly in patent and copyright law. His work requires a lot of research, claim drafting, and filings with government agencies. Ray is diagnosed with a mild form of cancer, but treatments will cause him to be unable to work for at least eight months.
In the few months leading up to the major part of his treatment, Ray loses more and more time at work and after his recovery time, he is only gradually able to return to work.
During the interim before and after his full disability, Ray is covered for his partial income losses by his residual disability insurance.
Obviously, disability insurance coverage with residual benefits can be extremely important. In fact, many disability insurance claims never reach a full benefits point: they are purely about the residual claim instead.