What type of disability insurance pays benefits for loss of income if the insured is unable to earn as much as before?

Residual disability insurance is designed specifically to provide benefits when the insured cannot earn as much as they did prior to becoming disabled, even if they are still able to work part-time or at a reduced capacity. This type of policy helps cover the loss of income caused by a disability that prevents the insured from returning to full employment, enabling them to receive partial benefits based on their reduced earnings. This kind of insurance is particularly valuable since it recognizes that many individuals may still have some capacity to work but face significant income loss due to their disability.

Presumptive disability refers to conditions that are automatically considered disabling, such as the loss of sight or limbs, rather than the income loss aspect. Partial disability would indicate a temporary inability to perform some job functions, but it may not encompass the broader concept of reduced earnings as reflected in residual disability. Permanently disabled is a classification that indicates a long-term or indefinite condition, but it does not specifically account for those who may still be working in some capacity and earning a reduced income. Thus, residual disability is the most fitting choice for the scenario described.