Residual Benefits in disability insurance are based on what?

Residual benefits in disability insurance are designed to provide support for individuals who have a partial disability that prevents them from working full-time but allows them to earn some income. These benefits are based on the proportion of income lost due to the disability, reflecting the financial reality of the insured's reduced earning capacity.

If an individual is able to work part-time or at a reduced capacity, the residual benefits will compensate them for the income they have lost as a direct result of their disability. This approach helps ensure that individuals can maintain a certain level of financial stability while they recover or adapt to their new circumstances. By focusing on the proportion of lost income, these benefits allow for a more tailored and fair response to the complexity of disability situations, acknowledging that not all disabilities result in a complete inability to work.

The other options, while relevant to some aspects of disability insurance, do not accurately capture the essence of residual benefits. For instance, total amount of disability income focuses on the maximum payout without regard to earnings lost, age may influence policy terms but does not directly relate to residual benefits, and duration of the disability pertains more to how long benefits are payable rather than how they are calculated.