While government employees receive a pension and other benefits, for most professions, the income that a person has, usually depends to a large extent on their health. If the person is partially or fully disabled, the income of the person is likely to be adversely affected. This can adversely affect the lifestyle of the person and make it difficult to get the medical help required. Hence many individuals, especially those working in high-risk professions, will purchase disability insurance, which will protect their income in case of any kind of disability.
There are different kinds of disability insurance like partial, residual, and total disability insurance, and the premium which is to be paid, coverage and payment also differs. Hence it is important to compare Residual Disability vs Total Disability before purchasing the right insurance policy. It is important to note that the terms and conditions will vary greatly depending on the insurance company, and each company has a different definition of residual disability and total disability. However, it is possible to summarize the requirements, terms, after comparing the terms and conditions of different insurance companies
Residual disability insurance is the insurance a person receives when he faces a partial loss of income due to a disability. Insurers define the partial disability in terms of loss of time, loss of duties, or loss of income. If a person is able to work for only 75% to 80% of the time he was working earlier, can perform only 20% or less of his duties, and his income after the disability is reduced by at least 15 to 20% , the person is considered partially disabled and can apply for residual insurance. The benefit depends on the extent of loss of income of the person compared to the income of the person before the disability.
It should be noted that for some insurers, a person will qualify for a total disability initially for a few months if the disability is due to injury or illness. Then as the person recovers and can work part-time, he will qualify for residual disability. For other insurers, a person will not be eligible for benefits if the income exceeds a certain percentage of the income before the disability. A person can purchase an income replacement or residual policy alone instead of a policy for total disability with residual cover since the residual policy is usually cheaper than the more comprehensive policy for a person who is totally disabled.
In high-risk professions, when a person may be completely disabled due to an accident or is more likely to fall ill, the income of the person is also higher due to the risk involved. In these cases, it is better to purchase a total disability policy so that he receives benefits that compensate for the loss of income due to the disability. Total disability is defined as the inability of a person to do any kind of work, either temporarily for a few months or for a longer period of time, like many years or a lifetime. Though the definition of total disability may vary depending on the insurance company, some conditions automatically qualify.
The insurers immediately recognize major disabilities like the loss of sight in both eyes, loss of hearing in both the ears, loss of speech, loss of use of both the hands or both legs, loss of use of one hand and one leg as a total disability. Usually, the insurance company will start the benefits for the disabled person immediately, and the normal procedure for getting benefits does not usually have to be followed. In these cases, the benefits may continue even if the person is able to work part-time at a later date. The coverage for total disability also varies for the occupation considered.
Due to the disability, a person may not be able to work in the occupation for which he is educationally qualified, trained, and experienced. If a person has got their own occupation total disability, he can get compensation for the loss of income, though this insurance policy is usually more expensive. This insurance is also not available for certain risky occupations, and for those who had health problems. A cheaper option is to get a policy for any occupation total disability, which compensates a person who is not able to work in any occupation due to the disability. For all benefits, the disability should be certified by a physician.