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Residual Disability

A type of disability that allows a person to work but with reduced capacity, earning less income than before their injury or illness. This partial disability coverage provides benefits proportional to the income loss rather than treating it as total disability.

Example

“After his back injury, John qualified for residual disability benefits because he could only work part-time and earned 60% of his previous salary.”

Memory Tip

Think 'RESIDUAL = what's LEFT after injury' - you have some work capacity left, but not your full earning power.

Why It Matters

Residual disability coverage is crucial because many disabilities aren't completely disabling but significantly reduce earning capacity. Without this coverage, people might receive no benefits despite substantial income loss from reduced work ability.

Common Misconception

Many people think disability insurance only pays for total disability where you can't work at all. In reality, residual disability coverage can be more valuable since partial disabilities that reduce income are more common than complete inability to work.

In Practice

Sarah, an accountant earning $80,000 annually, suffers a stroke and can only work 25 hours per week instead of 40, now earning $50,000. Her residual disability policy calculates a 37.5% income loss ($30,000 ÷ $80,000) and pays 37.5% of her full disability benefit. If her full benefit was $4,000 monthly, she'd receive $1,500 monthly in residual benefits.

Etymology

From Latin 'residuus' meaning 'remaining' or 'left over,' referring to the remaining work capacity after an injury or illness.

Common Misspellings

residuel disabilityresidual disabiltyresidual dissabilityresitual disability

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