{Read in 3:45 minutes} What is residual or partial disability?
Having a “residual” or “partial” disability means either you are limited in performing one or more of your job duties, or you can still perform them but for a shorter duration of time. If you have residual or partial disability coverage, the policy will pay benefits based on the reduction in your ability to work; however, these two requirements are essential:
You have a loss of income; and
The loss of income is due to an injury or illness.
How can I be sure that I’m covered?
If you have an Individual Disability Income Policy, you can look on the Schedule of Benefits, the Declarations page, or the table of contents to see whether or not this provision exists within your policy. I also recommend checking for riders and reading through the policy provisions to be sure.
With a Group Disability Income Policy, you may not necessarily find the words “residual” or “partial” as these policies often use more common terminology, i.e. “What if you are disabled and still able to work?” Again, read through your policy to be certain.
Once you have determined that you have residual or partial disability benefits, it is important to read the policy language carefully, as every policy differs regarding how your partial disability will be measured and how the benefit will be paid if you qualify for it.
If you are partially disabled, most policies will pay a fraction of the maximum monthly benefit for total disability.
For example: If you earn $120,000 a year (or $10,000 a month), have a maximum total disability benefit of $5,000 a month, and become partially disabled, causing a 50% drop in income, you would multiply your maximum benefit amount by whatever fraction your policy designates: 50% would entitle you to one-half of the maximum benefit, or $2,500 a month.
Additional provisions:
Even if your policy includes residual or partial disability income benefits, it will usually state that eligibility ends when you reach age 65. If you have a private policy or an individual policy with lifetime benefits, the lifetime benefit almost always applies only to a “total” disability. Most policies will not pay residual or partial disability benefits for life.
Some policies contain provisions for “cost of living” adjustments, with the adjustment being added to your prior monthly income, increasing the amount you were earning before becoming disabled.
Disability Income Policies are complicated and can become quite confusing. Read your policy carefully and/or have a qualified professional look it over and explain the provisions.
Evan S. Schwartz
Founder of Schwartz, Conroy & Hack
800-745-1755
ESS@schwartzlawpc.com