AD Banker Comprehensive Practice Exam

Residual Disability Income pays funds to the insured, to make up for what the insured would have earned after returning to work, and while recovering from ___________.

1. Short-term disability

2. Partial disability

3. Long-term disability

4. Total disability

The correct answer is: Total disability

The concept of Residual Disability Income is designed to provide financial support when an insured person is unable to earn their full income due to a disability but is no longer totally disabled. This kind of income replacement covers the difference between what the insured could earn if they were not recovering from a disability and what they are able to earn after they return to work, even while they are in the process of recovery. While the term "total disability" refers to an individual's complete inability to perform any work or substantially all of their occupational duties, the residual disability benefit specifically supports those who transition from a state of total disability to partial earning capability. The essence of the benefit is to help the insured as they navigate the challenges of re-entering the workforce after experiencing a debilitating condition. Understanding this context clarifies why the correct choice is total disability; the residual disability income is particularly relevant for someone who has experienced total disability and is now in a recovery phase while beginning to work again but is still earning less than their pre-disability income.