A Florida resident becomes totally disabled due to an accident and is unable to work. Their disability income policy has a 90-day elimination period and provides a monthly benefit of $3,000. If the disability began on March 1st, when would the first benefit payment be received?
- AJune 1st
- BJuly 31st
- CJuly 1st
- DJune 30th
Show answer & explanationAnswer & explanation
Correct answer: C. July 1st
The elimination period is 90 days. If disability began March 1st, the 90-day period ends May 29th (March 31, April 30, May 31 = 92 days, so 90 days from March 1st is May 29th). Benefits then start accruing from May 30th. The first payment is typically made at the end of the first month of benefits, which would be June 30th, but the question asks when the first payment would be RECEIVED, not when it starts accruing. The first payment is usually paid out after the first full month of benefits, which would be July 1st (for June's benefits). Let's re-evaluate: The elimination period is the time before benefits BEGIN to accrue. So, 90 days from March 1st ends on May 29th. Benefits start accruing on May 30th. The first full month of benefits would be June (May 30th to June 29th is not a full month). The first payment is typically made at the end of the first full benefit period, which is usually monthly. So, if benefits start accruing on May 30th, the benefit for the period May 30th - June 29th would be paid out around June 30th/July 1st. Given the options, 'July 1st' implies payment for the full month of June. Let's recalculate the elimination period more precisely. March has 31 days (31-1 = 30 days remaining in March). April has 30 days. May has 31 days. Total days: 30 (March) + 30 (April) + 30 (May) = 90 days. So, the 90-day elimination period ends on May 30th. Benefits begin accruing on May 31st. The first full month of benefits would be from May 31st to June 30th. Thus, the first payment would be received on July 1st, covering the benefit period ending June 30th. (March 1st + 90 days = May 30th. Benefits accrue from May 31st. First full month of benefits is June. Payment for June is made July 1st).
Why the other options are wrong
- A. Incorrect. This would imply a 3-month elimination period that ends on May 31st, and payment immediately.
- B. Incorrect. This would be too late, implying a longer elimination or payment delay.
- D. Incorrect. This would be the end of the first month benefits accrue, but usually payments are made after the period.
Disability Elimination Period
The waiting period between the start of a disability and the first day for which disability income benefits are paid. Benefits are not payable during this period.
- Time deductible for disability insurance.
- Must be satisfied before benefits begin to accrue.
- Longer periods mean lower premiums.
- Benefits are usually paid monthly in arrears after the period and first benefit month.
Memory trick: Eliminate the wait, then get paid after the full month's date.