California Life-Only & Accident and Health AgentAccident and Health InsuranceMedium
Mr. Chen has a health insurance policy with an Elimination Period of 90 days for disability benefits. If he becomes disabled on January 1st, when is the earliest he can begin receiving disability income payments?
- AApril 30th
- BJanuary 1st
- CApril 1st
- DMarch 1st
Show answer & explanationAnswer & explanation
Correct answer: C. April 1st
An Elimination Period (or Waiting Period) is the time that must pass after an insured becomes disabled before benefits begin. If the elimination period is 90 days starting January 1st, benefits would begin on April 1st (January has 31 days, February 28, March 31 = 90 days).
Why the other options are wrong
- A. Incorrect; April 30th would be 120 days later, not 90.
- B. Incorrect; the elimination period must be satisfied first.
- D. Incorrect; 60 days from January 1st would be March 1st, not 90 days.
Elimination Period (Disability Income)
A waiting period in a disability income insurance policy that must pass after the onset of a disability before benefits begin to be paid. It typically ranges from 30 to 180 days and functions like a deductible in health insurance, reducing smaller claims and lowering premiums.
- Time deductible for disability benefits.
- Must be satisfied before payments start.
- Reduces moral hazard and lowers premiums.
Memory trick: Eliminate the Wait, Get Paid Late.