raleigh disability insurance

5 Facts You Should Know About Residual Disability Benefits

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Disability income insurance replaces a portion of your income if you are ill or injured and unable to work. Some disability insurance plans offer residual benefits even if you are sick or injured but can still work part time. What is residual disability income? And how are payments calculated?

1. What Is a Residual Disability Income Payment?

A residual disability income payment is a reduced benefit based on a percentage of your lost income if you can only work part time due to an illness or injury. Your insurer may offer an add-on feature, called a partial disability rider, that allows you to purchase the option to receive partial income replacement if you can still work part-time.

According to Bureau of Labor statistics, in 2019, 32 percent of workers with a disability worked part time, compared with 17 percent for those with no disability. So, for many families, a residual disability rider is worth considering.

2. How Are Residual Disability Income Payments Calculated?

Residual disability income payments are calculated based on the income you are losing if you can only work part time. You will receive a percentage of the total monthly disability benefit stated in your policy. In many cases, if your income loss is greater than 75%, the insurer will pay you 100% of your monthly disability insurance benefit.

For example:

  • Your disability income insurance payment is $3,000 per month for full-time disability.
  • You purchased a residual disability income rider.
  • After an illness or injury, you can only work 40% of your full-time schedule.
  • Depending on your policy, the residual payment will be approximately 60% of $3,000 (total monthly benefit) or $1,800 per month.

3. Do You Qualify for Residual Disability Income?

Infographic of five facts about residual disability benefits

You might qualify for residual disability income if your disability insurance automatically includes residual disability benefits or if you purchased a rider for it.

Although you must read your policy and contact your insurer to confirm eligibility, you might qualify in these circumstances:

  • Loss of income: As a result of your disability, your work schedule is reduced, and you lost income.
  • Unable to perform all duties: You are unable to complete some of your job responsibilities.
  • Unable to work your full schedule: Your disability prevents you from working the same number of hours as before your illness or injury.

4. What Are Your Options for a Residual Disability Rider?

Many insurers that offer a residual disability rider have at least two options to choose from—basic and enhanced. As expected, the cost of the rider increases with the level of benefits it provides.

  • Basic – A basic rider usually requires a significant percentage of lost income before you can receive partial payment.
  • Enhanced – An enhanced rider reduces the percentage of lost income you must experience before benefits are paid. And an enhanced rider offers more benefits overall.

5. Do You Need a Residual Disability Rider?

Whether or not you need a residual disability rider depends on your unique circumstances.

Some factors to consider:

  • Amount of your savings
  • Number of your dependents
  • How a disability would affect your work performance and the physical or mental requirements for your job
  •  Your living expenses and any debt
  • How much disability income insurance you need or already have

Interested in NC Disability Income Insurance?

If you live in North Carolina and are interested in disability income insurance, contact Hunt Insurance of Raleigh. We will give you personalized service and thorough answers to help you decide if disability insurance is right for you.

How Do You Know If You Qualify for Disability Benefits?

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Social Security Administration (SSA) provides disability benefits–or Social Security Disability Income (SSDI) to people who have a qualifying disability and are unable to work for a year or more.

Do You Qualify for Disability Benefits?

Man in a wheelchair and working on a laptop in the kitchen; for information on who qualitifes for disability benefts

The Social Security Administration establishes the qualifications for SSDI. Benefits are not available for partial or short-term disability. You’ll find details on the SSA website. Some of the requirements include:

  • Previous employment in jobs covered by Social Security
  • Current unemployment due to your illness or injury
  • An injury or illness that significantly limits or restricts your ability to do any work-related activities, including lifting, standing, sitting, and concentrating for at least 12 months
  • An injury or illness that meets the criteria on the SSA’s list of qualifying medical conditions

What Should You Know About Social Security Disability Benefits?

Although you may need and apply for social security benefits, there are important factors to consider:

  • Each year more than 60 percent of disabilities are denied.
  • If your illness meets the qualifying medical conditions defined by the Social Security Administration, consult with an SSDI attorney to ensure your application and supporting documentation meets the requirements. It will prevent your case from being denied due to incomplete or insufficient details.
  • An SSDI claim can be approved in 30 to 90 days. Some cases take up to two years before you receive benefits.

SSDI vs. Disability Income Insurance

Disability income insurance is an insurance policy that you purchase. It is a way to replace part of your income if you are ill or injured and unable to work. Your disability insurance policy will specify which illnesses quality for benefits.

If you’re currently employed and not ill or injured, act now. Consider disability income insurance as a way to help you plan wisely. The statistics show why:

  • Each year, 5.6 percent of Americans will experience a short-term disability due to pregnancy, illness, or injury.
  • One of four 20-year-olds will experience a short-term disability before they reach age 65.
  • Only 48 percent of Americans say they have enough savings to cover three months of expenses if they become disabled and unable to work.

What Can You Expect with Disability Insurance?

Disability insurance doesn’t replace 100 percent of your income. Most plans offer 50 to 70 percent of income coverage. The average cost of coverage is three to four percent of your income. You select coverage and add-on features based on your income, your family’s needs, and your budget. But if you’re injured or become ill, disability income insurance limits mounting debt and increases your peace of mind.

Get Guidance Before You Decide

If you’re thinking about disability income insurance, John Hunt of Hunt Insurance in Raleigh-Durham can help. He removes the guesswork with clear, transparent explanations to help you decide if disability income insurance is right for you and your family.

Start the conversation. Contact us by phone or submit the contact form on our secure website.

For details, read the disability income insurance page on our website.