Texas General Lines — Life, Accident, Health and HMOHealth InsuranceMedium
A client has a disability income policy that offers a 'residual disability' benefit. Which of the following best describes when this benefit would be paid?
- AWhen the insured is totally disabled and confined to their home.
- BWhen the insured suffers a disability and is eligible for Social Security benefits.
- CWhen the insured is partially disabled and experiences a loss of income.
- DWhen the insured cannot perform any duties of their occupation.
Show answer & explanationAnswer & explanation
Correct answer: C. When the insured is partially disabled and experiences a loss of income.
Residual disability benefits are paid when an insured is partially disabled and, as a result of that disability, experiences a loss of income, even if they can still perform some duties of their occupation. This benefit helps bridge the gap between total and no disability.
Why the other options are wrong
- A. Home confinement is typically associated with some total disability definitions, not residual.
- B. Eligibility for Social Security benefits is a separate criterion and not directly tied to residual disability definitions in private policies.
- D. This describes total disability, which would trigger the full monthly benefit.
Residual Disability Benefit
A feature in a disability income policy that pays a benefit when an insured is partially disabled and suffers a loss of income, even if they can perform some work duties.
- Provides a pro-rata benefit based on income loss
- Does not require total inability to work
- Encourages return to work by not requiring complete cessation of employment
Memory trick: Residual is when you're 'Left' with 'Less' income, but not 'Zero'.