Residual Coverage: Helps You Be Whole When You’re Not-Quite
Traditional disability coverage has been explained as that benefit which pays up to 70 percent of your monthly income when you (the insured) are totally disabled due to illness or injury.
That coverage stops paying as soon as you can go back to work – even if it’s not to the level you had before the disability. Many times, the traditional coverage keeps some workers completely out of the workforce, even if they could return part-time – simply because the disability benefits are more than what the person would make going back to work part-time.
This is where residual coverage comes in. If you cannot go back to work at the level you had before the disability, but you are able to work to a certain extent, then residual coverage kicks in to pay the “residual” income – that which is above and beyond your part-time income to cover your pre-disability income.
For example, if you were on a salary that paid you for 40 hours per week, but you could only return 15 hours per week after a disability (say, a heart attack), while the traditional coverage would no longer pay once you got back to work, the residual coverage (if you have it) would pay the remaining salary difference between your current 15 hours and the 40 you used to work. The benefit would then drop as you work more hours, until you are back
to a 40-hour work week.
For a long time, companies only offered the traditional coverage. Now, though, not only do many have residual polcies, but many have residual-income components in their traditional policy. These are usually saved for those in lower-risk occupations, where people are generally more likely to get back to work on a part-time basis while recovering, while higher-risk occupations tend to require practitioners to fully recover before returning to work.
Doctors and dentists are generally considered low-risk occupations, so it’s very likely that you will be able to find affordable disability policies that have these residual-income components, so you can get back to helping people sooner while still taking care of your family’s needs.