What is the main purpose of the “residual benefit” in disability insurance?

The main purpose of the “residual benefit” in disability insurance is to provide partial benefits to insured individuals who return to work on a part-time basis yet continue to experience a loss of income due to their disability. This feature is particularly valuable as it supports insureds in transitioning back to work while acknowledging that they may not be able to earn their full income immediately.

The residual benefit works by calculating the difference between the insured's pre-disability income and their current income, which allows them to receive compensation for the income lost as a result of their continuing disability. This approach not only encourages individuals to return to work, which can aid in their recovery and reintegration into the workforce, but it also ensures they have financial support during this process. By offering partial benefits rather than full benefits alone, residual benefits recognize the gradual nature of recovery and the complexities involved in returning to work after a disability.