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Disability Insurance - Elimination Periods

The elimination period is the length of time between the onset of a disability, and the time you are eligible for benefits. It is best thought of as a deductible period for your policy. In a previous paragraph, we mentioned that individuals must have a total disability for five months in order to request social security benefits. This five-month waiting period (or 150 days) is known as an "Elimination period". The same "waiting period" concept applies when looking at individual disability policies. The chart below shows typical elimination periods:

Elimination Periods (in Days)

Shortest Period Most Popular Periods Longest Periods
30 days 60 to 90 days 120 to 720 days

For an individual disability insurance policy, the industry has typically made the most attractive offer at a 90-day elimination period. Insurance companies will charge you with an extremely higher premium rate if you choose to go with a shorter elimination period of 30, or 60 days. At the same time, insurers will give you a price break if you can accept an elimination period longer than 90 days. While the cost of having a shorter elimination period is much higher, you will find that going with a longer elimination period may not be a wise decision for those individuals that lack adequate savings to cover expenses during the waiting period prior to benefit payments kicking in.

Practice Question:
Julie goes on total disability on January 1, she has a disability policy with a 90-day elimination period. If she files all the required documents with her insurance company and is approved for disability payments, when can she expect her first income benefit payment?

A. Immediately
B. 90 days from January 1
C. 120 days from January 1
D. Upon completion of her physical and 190 days after January 1

Answer: C
Julie would need to complete her 90-day waiting period (elimination period) and then she would receive her first benefit payment in the next 15 to 30 days. The best answer is 120 days from January 1, the common misconception is that a check will be received on the 90th day.

Benefit Amounts
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