What is an elimination period?

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.



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