Texas General Lines — Life, Accident, Health and HMOHealth InsuranceMedium
Which of the following statements BEST describes the 'Elimination Period' in a disability income insurance policy?
- AThe maximum length of time for which benefits will be paid for a single disability.
- BThe amount of time an insured must be employed before becoming eligible for coverage.
- CThe period after a disability during which the insured is immediately eligible for benefits.
- DA waiting period after the onset of a disability before benefits begin to be paid.
Show answer & explanationAnswer & explanation
Correct answer: D. A waiting period after the onset of a disability before benefits begin to be paid.
The elimination period, also known as the waiting period, is a specified duration after a disability occurs during which no benefits are paid. It functions similarly to a deductible in health insurance, requiring the insured to cover initial costs.
Why the other options are wrong
- A. This describes the 'benefit period', not the elimination period.
- B. This describes a probationary period for employment, not a disability policy term.
- C. This describes the opposite of an elimination period, implying immediate benefits.
Elimination Period (Disability Income)
A waiting period in a disability income policy, starting from the onset of a disability, during which no benefits are payable. It's similar to a deductible.
- Must be satisfied before benefits begin.
- Can range from a few days to several months.
- Longer periods result in lower premiums.
- Reduces the insurer's liability for short-term disabilities.
Memory trick: Eliminate the wait, then get paid for the benefit period.