Chances are that, if you do become disabled from an illness or injury, you may not be totally incapacitated. Or, as with many illness-caused disabilities, such as multiple sclerosis, your ability to work may slowly degenerate over time. In either case, you can still work, but your income is likely to decrease. If you become disabled but are still able to work in a more limited capacity (i.e., reduced hours or fewer duties), you would be considered to be partially disabled. Only those disability insurance plans that offer a “residual disability benefit” option or rider will cover income lost due to a partial disability. This benefit will replace the amount of income lost as a percent of your pre-disability earnings. So, if your income decreases by 50 percent, you will receive 50 percent of your full monthly benefit, up to 80 percent of your pre-disability earnings. Without a residual disability benefit option, you would have to be totally disabled in order to receive benefits.
Residual disability benefit riders do vary from one policy to the next, and, as with the “total disability” definition, some are more restrictive than others. Physicians should only consider policies that will pay a proportion benefit when their earnings decrease by more than 20 percent. The loss-of-earnings threshold for some policies is as low as 15 percent.
So, if a partial disability keeps you from seeing a maximum amount of patients or performing certain functions and your monthly income is reduced by 25 percent, a residual disability benefit will pay you 25 percent of your full benefit.
A more restrictive residual disability benefit might require a certain amount of lost time or lost duties, and may not pay benefits if you are able to work in any other capacity. Even more restrictive are residual disability benefit riders that require an initial period of TOTAL disability before paying any residual benefits. A strong, physician-specific residual disability benefit will only require a loss of income, either as a result of less time spent in practice or less duties performed.