Disability insurance is purchased to protect your income in the event of a permanent or partial disability. After all, your earning power is likely the most important asset that you have. But what if you are not a salaried employee and a disability caused you to lose part of your customer base?
A “Residual Benefit” is part of a disability insurance policy that pays you lost income to get you closer to your former level of earnings.
Let’s take an example of Bob, an attorney earning $250,000 per year that recently had a broken back which forced him out of work for two years. Bob’s largest client was paying him $50,000 per year, but when he became disabled, the client stopped paying Bob and began using a different attorney since Bob’s services weren’t available. Now, two years later Bob is back at work, but can only earn $100,000 because he lost the large client and several others since he can only work 20 hours a week now. How does he make up for the lost $150,000 and his inability to work the 60+ hours per week he was working before? With a residual benefit that pays him a partial benefit based on the lost income.
Most disability policies will only pay a recovery benefit for a short time period or pay a lump sum. If you have a client base that could be lost in the event of a disability, make sure to purchase a policy with a residual / partial disability benefit payable for the full benefit period, up to the time that you regain your former income level. Most disability insurance contracts that offer this benefit require a 20% loss of income and often a loss of time and/or duties, while our top carrier offers the following:
- Dollar-for-dollar replacement of lost income for the first 12 months, up to the monthly benefit
- Proportionate loss of income benefit beginning in month 13
- Benefits paid for up to the entire benefit period when there is a minimum 15% income loss as the result of the cause of your disability without any requirement for loss of time or duties
When shopping for disability insurance, make sure to purchase a policy that includes the most favorable contract terms. To get a quote for a disability insurance policy, give us a call at 1-800-571-2980 from 9 AM to 9 PM eastern time or send us an e-mail at Info@terminsurancebrokers.com 24 hours a day. You can also complete the short form below. Due to the number of factors involved in quoting disability insurance, online instant quotes are not available.