The Residual Rider (AKA: Partial Disability Rider)
A Residual Rider is an optional rider that can be included as part of your individual Disability Insurance Plan. This rider is also known as the Partial Disability Rider and protects you in the event that you are determined to be disabled but not considered to be “Totally” disabled. Most Disability Insurance Plans include a Partial Disability Rider, but since this Residual Rider is optional, there are some individuals who elect to eliminate the rider from their policy in effort to save money on premiums. Please be aware this decision is potentially risky.
Here’s why: A large percentage of disability claims filed in the U.S. are related to partial disability impairments. Occasionally, a disability claim may even start out as a partial disability before transitioning into a total disability case. This can occur with debilitating diseases such as MS or Parkinson’s Disease. Or, in some instances may be the result of an individual still being able to work and perform their duties to a limited extent. For example, “extreme lower back pain” or “Chemotherapy for cancer” might allow an individual to still work for a few hours a day or a couple of days a week, depending on the severity of their disability. These “partial disability” scenarios more than likely would result in a significant loss of income. The purpose of the Residual Rider is to help offset that income loss.
Versions of the Residual Rider
Different insurance providers offer their own version of the Residual Rider and have different requirements to qualify under their disability plan to receive partial disability benefits. One insurance company might stipulate that your disability requires at least a 15% loss of your income. Conversely, another carrier’s rider option might specify a 20% loss of income before benefits would kick in. In addition, some Residual Riders might also require you to show a loss of “time” or duties”. If so, this would necessitate having to meet additional contract language requirements to receive your partial disability benefits. This extra language may or may not prove advantageous, depending on your occupation or specialty of medicine.
Residual Rider with Recovery Benefits
Lastly, some versions of the Residual Rider also include what is known as “Recovery Benefits”. This feature protects you when you are returning to your occupation after a disability and are rebuilding your client base. Or, possibly you are striving to work a full shift so that you can reach your prior income level. The benefits of a Recovery Rider can help pay your bills and meet your living requirements until you fully recover physically and professionally. Most commonly, this rider is utilized by self practice physicians and dentists or independent contractors such as Locum Tenens Physicians.
When weighing all of your options when it comes to the Residual Rider, it’s helpful to talk with an experienced insurance agent to determine which rider best suits your personal and professional needs. As mentioned previously, in a small percentage of cases, it might even be advised to go without the Residual Rider altogether to save premiums (as long as you are aware of the risks of doing this), and an experienced agent can advise you as to the pros and cons of doing so.
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