Residual Disability
Residual Disability is a type of coverage provided in Disability Insurance or Long-Term Disability Insurance policies that offers benefits when an individual can work but is earning less due to a covered illness or injury.
Example #1
For example, if a graphic designer injures their hand and can no longer work at full capacity, the residual disability coverage would provide benefits to make up for the lost income.
Example #2
Another example could be a musician who injures their back and can no longer perform full concerts, receiving benefits to compensate for the decrease in earnings.
Misuse
Misuse of residual disability coverage could occur if an insurer denies a valid claim by misinterpreting the policy terms to avoid paying benefits to an eligible policyholder. It's crucial to protect against misuse by thoroughly understanding the policy details and seeking legal advice if needed, ensuring that policyholders receive the benefits they are entitled to.
Benefits
One of the key benefits of residual disability coverage is that it provides financial support to policyholders who can still work but at a reduced capacity due to an illness or injury. This ensures that individuals can maintain their standard of living and meet their financial obligations even if their income is impacted.
Conclusion
Residual Disability coverage in insurance policies like Disability Insurance or Long-Term Disability Insurance plays a crucial role in supporting individuals who experience a decrease in earning capacity due to a covered illness or injury. Understanding the benefits of this coverage and being aware of potential misuse is essential for consumers to make informed decisions and protect their rights.