The Definition of Residual Benefits
You may need disability benefits in the event that you are injured or become seriously ill during your working life. Insurance policies are designed to provide people with an income while they are unable to work, but not all policies are the same. The details of benefit amounts, deductibles, duration and qualifications can differ widely among insurance plans.
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Residual Benefits
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Insurance plans that offer residual benefits will continue to pay you even when you return to work on a part-time basis. Plans without residual benefits are intended only for individuals who are completely disabled, and their benefits stop when partial recovery occurs. Residual benefits are designed to fill the gap between what is earned and what is required to live during the time the insured party is recovering. In the case of either accident or illness, the recovery process may be prolonged, and a person may be able to work on a part-time or modified basis for a long period of time. Residual benefits provide for this transition period without the person being financially penalized for working.
Income Based
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Income-based residual benefits take the amount of money a person is making into account when determining the size and duration of the benefits. An income-based plan is most appropriate for a person who is self-employed or paid by piecework or commission. During the time in which a person's income remains lower than what it was before the accident or illness, an income-based benefit plan will make up all or part of the difference.
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Time and Duty Based
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A time-and-duty-based disability benefit plan serves the same purpose as an income-based plan, but takes hours worked and the nature of the work performed into account, rather than the dollar income. This plan is more appropriate for people who are employed by a company and have a set hourly wage or salary. Some people who are recovering from a disability will work fewer hours for a period, while others will work at the same job but be unable to perform certain tasks. A time-and-duty-based plan reimburses an insured party for the income lost through hours that can't be worked or tasks that can't be performed.
Kinds of Insurance
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Residual benefits may be part of an insurance plan provided to an individual through private insurance, employer-provided insurance or a government plan. While each of these plans is paid for by a different individual or organization, the internal workings of the plans can be quite similar. Whether you pay for insurance yourself or have it provided by your employer or a government program, educate yourself about it so you know how it works. This information can help avoid serious misunderstandings and will enable you to know how to proceed if you should be injured or suffer from a serious disease or illness.
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