Residual disability and definitions of disability

The first area of concern for most professionals looking for disability insurance is usually the definition of disability.

The question asked is: "Does it cover me if I can't do the duties of a ______(one's occupation)? " This is a key question and you do want an "own occupation" policy. Even better, if you're a physician or a specialty dentist, you want a definition that defines your occupation as your specialty. We'll talk more about own occupation disability definitions in an upcoming post.

One should also differentiate among disability insurance policies on the residual or recovery benefit
or what can be called generically "the return to work benefit." What happens to the insurance benefit if one recovers from a disability and goes back to work?

Some policies use a time and duties test. The more favorable ones use an income definition. Here's an example: If you're a doctor and you return full time to work, are you going to have an income equal to your prior income right away? Probably not, it will take time to build up. Even if one had a full patient load right away, the cash flow would take time to start coming in.

If you were back full time, a time and duties definition of residual disability would say that you're recovered, you're back to work and benefits end even though you may still have an ongoing complete or partial income loss.

An income definition would continue to pay you the pro rata amount of your policy (or all of it) in relation to what you actually earn. So, you can be back full time at work and building back your business and receiving benefits. One may never get their full income back and with an income method, benefits would continue until you get to 80% of prior income. Benefits would have been long gone in a time and duties definition.
Look for the better residual/recovery benefit in a disability insurance policy. You can find those from the disability insurance experts at the Protectyourincome.com web site.

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Author, Richard Reich, writes articles on disability insurance for ProtectYourIncome.com - Disability Insurance Online, an online source for disability insurance quotes and information. For more information, visit http://www.ProtectYourIncome.com.