When it comes to long term disability insurance, it’s important to understand the difference between total and residual disability. These two concepts can significantly impact your insurance benefits and coverage. In this article, we’ll take a closer look at what each term means and how they affect your insurance policy.
What is Total Disability?
Total disability is a term insurance companies use to describe when a person is completely unable to work. This means that the person is unable to perform the material duties of their occupation. They also cannot engage in any other work that is reasonably available to them based on their education, experience, and training.
For example, consider a surgeon that injures their hand and is unable to perform surgeries. They would be considered totally disabled because of their inability to perform the duties of their occupation. In this case, the surgeon would receive total disability benefits to replace their lost income.
What is Residual Disability?
Residual disability is when a person can work, but their ability to perform their job duties is impaired. This means they can still perform some duties of their occupation, but they cannot earn their full pre-disability income.
For example, consider a computer programmer that injures their arm and is unable to type for long periods of time. They may still be able to work but their ability to earn the same amount of income as before is diminished. In this case, the programmer would qualify for residual disability benefits to make up for their lost income.
What’s the Difference Between Total and Residual Disability?
The main difference between total and residual disability is the level of disability required to qualify for disability insurance benefits. Total disability requires a person to be completely unable to work. Residual disability only requires a person to be partially disabled.
Another difference between the two is the amount of benefits a person is entitled to receive. With total disability, a person is entitled to receive the full amount of benefits specified in their insurance policy. With residual disability, a person is only entitled to a portion of their benefits. The exact amount of benefits payable is based on the level of impairment and loss of income.
Which One is Better?
There is no clear answer to which one is better because it ultimately depends on your individual situation. Total disability may be more beneficial if you are unable to work at all. Residual disability may be more beneficial if you are able to work but your ability to earn income is significantly reduced. Ideally, your policy will include coverage for residual disability and total disability.
It’s important to carefully review your long term disability insurance policy. You need to determine the types of disability coverage included and what the requirements are for receiving benefits. You should also consider factors such as:
- The length of time benefits will be paid,
- The waiting period before benefits start, and
- The maximum monthly benefit amount.
Total and residual disability are important concepts to understand when it comes to disability insurance. Knowing the differences between total and residual disability can help you make an informed decision about your insurance coverage. Review your insurance policy carefully and speak with your insurance provider if you have any questions or concerns about your coverage.
If you have been denied total disability or residual disability benefits, we may be able to help. We represent long term disability insurance claimants across the United States. Call (888) 321-8131 to schedule a free case evaluation.