Becoming a physician requires years of education, hard work, and sacrifice—as you well know. You dedicate a lot of time preparing for a fulfilling career and the substantial income that comes with it, which means you have less time and opportunity to accumulate wealth.
And while all that hard work pays off for many, others are not so fortunate. Imagine being involved in an accident that leaves you partially or totally disabled…limited in the capacities you can perform in your specialty. Some or all of the income you worked so hard to earn no longer exists, but your financial obligations and student debt remain the same.
That’s why disability insurance is one of the most important types of insurance physicians can invest in. Disability insurance provides crucial protection against the financial risk of disability—and disability riders further that protection by providing a more comprehensive insurance policy.
That brings us to one of the most important disability riders you can invest in: the residual disability rider.
What Is the Residual Disability Rider?
Before you can receive disability insurance benefits, you’ll need to meet your policy’s definition of disability. Without a partial disability rider, you’d need to be considered totally disabled before your benefits kick in.
But what if you were involved in an accident that only left you partially disabled? What if you could no longer perform procedures, but could continue working your clinical duties? Or, what if you become severely ill and could only work one or two days each week?
Having a residual disability rider allows you to qualify for benefits if an injury or illness leaves you unable to perform some, but not all, of the substantial duties of your specialty, resulting in considerable loss of income.
The name of this essential rider varies by insurer, hence the common residual disability vs. partial disability question. However, it just comes down to what an insurance company refers to the rider as.
Benefits of the Residual Disability Rider
A residual disability rider pays out disability benefits based on a percentage of the income you lose due to a severe illness or injury. The higher the income loss, the greater the benefit amounts—this rider provides a broader safety net for your disability insurance policy.
So are residual disability riders worth it? While investing in a residual disability rider will increase your monthly premiums, it doesn’t increase premiums by a substantial amount. Like all disability insurance policies and riders, it’s an investment to protect your future. You may never become severely ill or disabled before you retire. Or, you may someday thank your lucky stars for choosing to invest in a partial disability rider.
When to Add the Residual Disability Rider to Your Policy
It’s best to add a residual disability rider to your policy while you’re young and healthy. Like all forms of disability insurance, rates are lowest while you’re in good health and at a lower risk of disability. Therefore, the ideal time to invest is early in your career.
Disability Insurers That Offer the Residual/Partial Disability Rider
You have several options to choose from if you’re interested in a disability insurance policy that includes a residual disability rider. Reviewing each policy’s benefits and how they differ is important to find the right policy for you:
Guardian
Guardian has two partial disability benefit riders to choose from; Enhanced or Basic.
The Basic Partial Disability Benefit Rider provides benefits when you’re working within your specialty but your income is reduced by at least 20% as a result of the injury or sickness that caused you to become disabled. In addition, you must be unable to perform one or more of the material and substantial duties of your occupation or be able to perform all the material duties, but not for the length of time they normally require. Benefits are payable in proportion to your loss of income up to the policy benefit:
- If the loss of income is more than 75% of your prior income in any month, the loss will be considered 100%.
- For the first six months, the loss will be considered to be at least 50%; after six months the payout will match the percentage of income you lost (you lose 30% of income, and you will get 30% of the monthly benefit).
The Enhanced Partial Disability Benefit Rider provides benefits when, solely due to injury or sickness, you suffer a loss of income of 15% or more. Benefits are payable in proportion to your loss of income up to the policy benefit:
- If the loss of income is more than 75% of your prior income in any month, the loss will be considered 100%.
- For the first 12 months, the benefit is equal to the actual loss of income but the minimum payout will be 50% of the benefit; after 12 months of disability, benefits are paid in proportion to your income loss - if you lose 20% of income, you will get 20% of the monthly benefit.
Ameritas
With the Enhanced ResidualDisability Rider from Ameritas, you receive partial disability benefits if an illness or injury results in a monthly earning loss of 15% or more, and you are able to perform one or more, but not all, of the material and substantial duties of your occupation or you are unable to engage in your occupation for more than 80% of the time as was usual prior to the disability.
- If the loss of income is more than 75% of your prior income, the loss is considered to be 100%, as if you’re totally disabled.
- For the first six months of partial disability, the benefit will be at least 50% of your monthly benefit; after six months it will be the same percentage of income lost.
Ameritas also has the Basic Residual Disability Rider. You must still lose at least 15% of your income to qualify for partial disability benefits. However, the difference compared to the Enhanced Residual Disability Rider is that with the Basic Residual Disability Rider, the maximum monthly benefit payable would be 50% of the benefit.
Standard
Standard offers two residual disability riders:
- Basic Residual Disability Benefit Rider: With this rider, you’ll receive benefits proportionate to your income loss due to an illness or injury. To qualify, you must have a loss of time or duties in your specialty and at least a 20% loss of income. The rider pays at least 50% of the monthly benefit for the first six months. After that, the benefit is proportional to your loss of income. Enhanced Residual Disability Benefit Rider: The enhanced residual disability rider works similarly to the basic rider, but pays at least 50% of your monthly benefit for the first 12 months you qualify for benefits. After that, the benefit is proportional to your loss of income.
Principal
Principal's Residual Disability Rider provides benefits if you lose at least 20% of your prior income, and will pay proportionate to your income loss with a guaranteed minimum benefit of 50% for the first six months of disability. To qualify, your illness or injury must limit your ability to:
- Perform some, but not all, of the duties in your specialty; or
- Work full-time in your specialty
Additionally, the rider provides 100% of your benefit amount if your income loss exceeds 75%.
MassMutual
MassMutual’s Extended Partial Disability Benefits Rider provides a disability benefit if you are not totally disabled and while actually working in your usual occupation/specialty, as a result of sickness or injury, you have lost at least 15% of your pre-disability income.
During the first six months of partial disability, you are also partially disabled if due to sickness or injury, you are working at your usual occupation and you either:
- Can perform with reasonable continuity one or more, but not all, of your substantial and material duties; or
- Can perform with reasonable continuity all of the substantial and material duties, but for no more than 85% of the time they were collectively performed consistently prior to the disability.
Find Out Which Policy is Right For You
Disability insurance riders provide the flexibility and options necessary to provide comprehensive protection. But with so many riders to choose from, it can seem overwhelming to get started.
Fortunately, we’re here to help you find the insurance policies and riders that best suit your needs, income, and profession. Contact us today to learn more about residual disability riders, and find the disability insurance that’s right for you.