Proportionate Benefit

What Does Proportionate Benefit Mean?

A proportionate benefit is a type of disability income protection that provides financial compensation when the insured experiences a disability that partially reduces their ability to work. The compensation is determined in proportion to the degree of disability and the corresponding reduction in work capacity.

Insuranceopedia Explains Proportionate Benefit

Proportionate benefits provide financial compensation to a disabled worker, typically covering the difference between their pre-disability salary and their new salary earned after the disability.

For example, if the insured earned $100,000 annually before the disability but can only earn $50,000 afterward, the proportionate benefit would amount to the difference, which is $50,000 per year.

However, some insurance companies pay only a percentage of this difference, such as 50%. In the above example, the insured would receive just $25,000 in benefits annually.