You must purchase a Residual or Partial Disability Rider that is part of your Disability Policy.
Why should I purchase the Residual Disability Rider?
So that you are always protecting at least 60% of lost income. Without this rider you either collect 100% on a total Disability or zero for anything less than total.
Disability policies cover loss of income due to a total disability. But what happens when you are partially disabled? When that happens you need an optional Benefit called Residual Disability.
A Partial Disability is when you loss of income is at least 20% and up to 80%.
How to calculate your partial loss:
To determine the percentage of lost income divide your income after the disability by your pre-disability income. Example, if your pre-disability income was $5,000 per month and your income after disability is $2,000 then your loss of income is 60%.
If your loss of income is 80% or greater then the disability companies consider your loss of income to be 100%.
Your benefit under Residual Disability is that percentage of lost income multiplied by the total disability benefit on your policy.
So if your total disability benefit is $10,000 per month you multiply that times the 60% and you get $6,000 that month.
This formula is used each month you have a partial claim.
Posted by: Dean Schachter