What is the primary purpose of a 'residual disability' benefit in a Disability Income policy?

Question: What is the primary purpose of a 'residual disability' benefit in a Disability Income policy?

Answer options:

• It provides a lump sum payment if the insured dies from the disability.
• It pays a full benefit even if the insured can work in a different occupation. ✅ It pays a partial benefit based on the percentage of income lost due to a partial disability.
• It extends the benefit period beyond the age of 65.

Correct answer: It pays a partial benefit based on the percentage of income lost due to a partial disability.

Explanation: A residual disability benefit is designed to pay a portion of the total disability benefit when the insured returns to work but suffers a loss of income (usually at least 20%) due to the ongoing effects of the disability.