Match the Residual Rider to the Client Need

May 24, 2017

The base Platinum Advantage income protection policy covers total disability only, and a Residual Disability Rider must be added to ensure your clients will be covered if they become partially disabled. We recommend adding the appropriate residual disability option to every illustration.

Occupation classes 3A/3P and higher may choose between the Basic and Enhanced Residual Disability Riders. It's important to note that the Basic Residual Disability Rider provides strong and appropriate residual coverage at competitive premium rates for most policyowners. In fact, it matches or exceeds many carriers’ strongest residual options.

However, the Enhanced Residual Disability Rider may be the better match for someone working in a specialized profession, or someone who would have difficulty proving a loss of income immediately after disability, such as a business owner. Here are three features the Enhanced Residual Disability Rider offers beyond the Basic Residual Disability Rider:

  1. Definition of Residual Disability

The definition of residual disability hinges on three potential losses: loss of time, loss of duties and loss of income. With the Enhanced Residual Disability Rider, the insured must lose 20 percent of only one of those to be considered residually disabled during the benefit waiting period – 20 percent of duties or 20 percent of time worked or 20 percent of predisability earnings.

With the Basic Residual Disability Rider, the insured must lose at least 20 percent of income, plus either 20 percent of time worked or duties. A client whose income may not be immediately reduced by cutting back on hours or duties would be able to satisfy the benefit waiting period under the Enhanced Residual Disability Rider.  

Example: A commission-based mortgage broker has several planned closings spanning over three months. Due to a disability he must reduce his hours, but his income remains level as commissions from his previously scheduled closings are paid. Under the Enhanced Residual Disability Rider, he could be considered residually disabled during the benefit waiting period due to his reduced hours.

  1. Minimum Benefit Guarantee

With the Enhanced Residual Disability Rider, a policyowner will receive at least 50 percent of his or her monthly benefit for the first 12 months of disability. With the Basic Residual Disability Rider, this guarantee is for six months.

  1. Recovery Benefits

Both the Enhanced and Basic Residual Disability Riders offer comprehensive recovery benefits. However, with the Enhanced Residual Disability Rider, the insured may recover and return to either his or her previous occupation or another occupation. With the Basic Residual Disability Rider, the policyowner must return to his or her previous occupation to be eligible for recovery benefits.

Example: A metallurgist becomes residually disabled and cannot perform all the duties of the position for more than six months, which triggers his termination. He fully recovers, but by then his job is filled and there are no openings for that specific type of job. He then finds employment in another profession. Under the Enhanced Residual Disability Rider, a recovery claim would be considered; under the Basic Residual Disability Rider, it would not.

 

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