Residual Benefits

Published: | Updated: December 28, 2017

Definition - What does Residual Benefits mean?

Residual benefits provide a percentage of a policyholder's benefits if they become disabled due to health issues. These are monthly benefits that are paid until the injured or sick party is able to work again. Depending on the company, employees may even be able to obtain the benefits when they work part time.

Insuranceopedia explains Residual Benefits

Residual benefits are provided to policyholders that cannot work due to an injury or illness. They must provide sufficient amounts of proof to receive these benefits. The insurance company will provide a monthly income as long the policyholder has a current insurance policy. To calculate how much they will receive in benefits, the insurance companies take the loss of income amount and the benefit of what they would get if they could not work and create a percentage of that. This is only applicable to those who are temporarily disabled. These benefits eventually run out, at which time the person must apply for disability insurance if they continue to be unable to work.

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