Texas General Lines — Life, Accident, Health and HMOHealth InsuranceMedium
An insured individual has a disability income policy with a monthly benefit of $3,000. They become totally disabled and are unable to work. Their policy includes a 60-day elimination period. If they remain disabled for 5 months, what is the total amount the insured will receive from the policy?
- A$9,000
- B$3,000
- C$15,000
- D$6,000
Show answer & explanationAnswer & explanation
Correct answer: A. $9,000
The elimination period is 60 days (2 months) during which no benefits are paid. The insured is disabled for 5 months, so benefits are paid for 5 - 2 = 3 months. Total benefits = 3 months * $3,000/month = $9,000.
Why the other options are wrong
- B. This would be the benefit for only one month after the elimination period.
- C. This would be the benefit for the entire 5 months without an elimination period.
- D. This would be the benefit for two months after the elimination period.
Elimination Period (Disability)
A waiting period after the onset of a disability during which no benefits are paid.
- Functions like a deductible for time, not money
- Chosen by the applicant, affects premium cost
- Benefits begin after the period ends, not retroactively
Memory trick: Elimination period is the 'Start' line, not the finish line, for benefits.