What is an elimination period?

By Chizoba Morah AAA
A:

Elimination period is a term used in insurance to refer to the time period between an injury and the receipt of benefit payments. In other words, it is the length of time between the beginning of an injury or illness and receiving benefit payments from an insurer. It is sometimes referred to as a 'waiting' or 'qualifying' period. Before benefits are paid, most insurance policies require that a policyholder qualify for the elimination period. This means that the policies require the party asking for payments to be injured, ill or disabled during this period.

During the elimination period, the policyholder is responsible for any care he/she requires. Elimination period requirement is a common feature in policies like long term insurance and disability insurance. In some insurance policies, the elimination period serves as the policy's deductible. So, instead of paying a sum of money for required care, the policyholder has a set number of days during which he/she pays for his/her own care. Elimination periods range from 30-365 days, depending on the policy.

Insurance premiums and elimination period have an inverse relationship. The shorter the elimination period, the higher the premium will be; the longer the elimination period, the lower the premium will be. When making a decision about the length of elimination period to choose, it is important for the policy holder to consider his/her ability to pay for care expenses. (For more on this topic, take a look at our Disability Insurance Tutorial.)

This question was answered by Chizoba Morah.

RELATED FAQS

  1. Who are the best-rated life insurance companies in the US?

    Learn about what makes an insurance company the best. Read about the best life insurance companies in the U.S. in 2014, following ...
  2. What are some examples of when insurance bundling is a bad idea?

    Learn about situations where insurance bundling may not be a favorable option. Bundling insurance is often a good idea, but ...
  3. What are some examples of unexpected exclusions in a home insurance policy?

    Learn about commonly excluded perils with different standard insurance policies. Explore events that homeowners should consider ...
  4. What are the tax implications of a life insurance policy loan?

    Learn the instances in which you are required to pay taxes on a life insurance policy loan, so you can avoid making a costly ...
RELATED TERMS
  1. Investment Income Ratio

    The ratio of an insurance company’s net investment income to ...
  2. Insurance Premium

    The amount of money that an individual or business must pay for ...
  3. Independent Agent

    An insurance agent that sells insurance policies provided by ...
  4. Long-Tail Liability

    Liabilities for claims that have long settlement periods.
  5. Commercial General Liability (CGL)

    A type of insurance policy that provides coverage to a business ...
  6. Claims-Made Policy

    An insurance policy that provides coverage when a claim is made ...

You May Also Like

Related Articles
  1. Thanks to the Affordable Care Act, you can no longer be denied health insurance for having a pre-existing or chronic medical condition.
    Insurance

    Choosing A Health Plan For Your Chronic ...

  2. Four key factors to check out before you just sign up for dental insurance. The coverage could be really worth it – or not.
    Insurance

    Does That Dental Insurance Have Cavities?

  3. Compared to other options, does it ever make sense to include cash-value life insurance in your investment portfolio?
    Trading Strategies

    How Good An Investment Is Life Insurance?

  4. Insurance

    Tips for Finding Affordable Health Insurance

  5. Insurance

    4 Steps to Finding the Right Health ...

Trading Center