Disability Insurance - Benefit Periods
The benefit period is the maximum length of time that disability income benefits will be paid to the disabled insured individual. Policies are issued with either short-term or long-term payout periods. Individual short-term policies are issued for benefit periods of two years or less, while long-term policies are issued with benefit periods of more than two years, such as 5, 10, or 20 years. Many long-term policies will have a benefit period that pays the insured until age 65. The length of time for benefits affects the premium of the policy, whereas; longer benefit periods will increase premiums to the policyholder.
Recurring Disabilities are a common experience for many individuals that experienced a total disability at some point of their life. This occurs when an individual recovers from a total disability, and then weeks or months later undergoes a recurrence of the same disability. Most policies will list a specified period of time that must pass disability-free in order for a new disability and elimination period to begin. If this time frame has not passed, the disability may be viewed as a continuation of the previous disability and a new elimination period will not have to be satisfied. If a disability is viewed as a continuation of the previous disability, benefits will continue to pay without having to satisfy a new elimination period. We'll discuss elimination periods next.