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Proportionate Benefit

What Does Proportionate Benefit Mean?

A proportionate benefit is a type of disability income protection that provides financial compensation if the insured acquires a disability that reduces, but does not eliminate, their capability to work. The compensation is proportional to the disability and the corresponding reduction in capacity to work.

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Insuranceopedia Explains Proportionate Benefit

Proportionate benefits provide a disabled worker with compensation that typically equals the difference between their old, pre-disability salary and their new salary from the work they have picked up after incurring the disability.

For instance, if the insured was making $100,000 per year but can only make $50,000 a year after their disability, their proportionate benefit will equal the difference between the two salaries, namely, $50,000 annually.

Some insurance companies, however, only pay 50$ of the difference between the pre- and post-disability salaries. In the example above, the insured would only be able to collect $25,000 in benefits.

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Disability InsuranceIncome Protection InsurancePersonal Lines

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