What Are Successive Periods?
Successive periods are periods of time that follow one another immediately and chronologically, and which are linked together by a common event.
- Successive periods are intervals of time the immediately follow one another.
- In finance, contracts will denote successive periods in the term for which the contract is valid.
- For insurance contracts, successive periods are used in disability policies to denote the exclusion period and benefit period terms.
- Corporations may also report financial figures denoting increasing gains or losses over successive periods.
Understanding Successive Periods
Successive periods are used in contracts when defining how long the contract period will last. A year-long contract, for example, will be comprised of 12 successive months, with the first month starting on the effective date and the last month ending on the contract anniversary date. The contract signing is considered the common event linking together the 12 months.
Successive periods are used to denote continuation. Someone who purchases a subscription to a monthly magazine, for instance, will receive one issue each month for twelve months, with the string of months considered a successive period of time. The common link between the months is the subscription the person purchased.
Insurance companies use successive period calculations when providing benefits to a policyholder, who visits a hospital for the same injury. Each visit is considered part of a successive period, and each visit is considered part of a continuation of the first injury, rather than a new injury.
In disability insurance contracts, it's important to know how insurance companies calculate the amount of time that benefits will be provided for injuries suffered. Insurance contracts provide for a maximum benefit period in which the policyholder can receive benefits for an injury. In the case of a disability contract, the benefits in question are a percentage of the policyholder’s income. The benefit period includes the number of days that benefits are drawn for a single injury or for successive periods of disability. Once the maximum benefit period has been reached, no further benefits will be paid.
Insurance companies often require a period of time to pass between benefit periods to consider them non-successive periods. This is called a “waiting period” or “elimination period.” The amount of time may vary according to the type of injury, with benefits only paid for one injury at a time. During the waiting period, the policyholder should be able to work a certain number of hours to be considered part of active employment.
Successive Periods Contract Clause Example
The following is some boilerplate language that may be found in a contract regarding successive periods:
"Successive Periods. The term of this plan shall automatically be extended for one (1) additional year at the end of the initial term, and then again after each successive one (1) year period thereafter (each such one (1) year period following the Initial Term is referred to as a successive period). However, the committee may terminate this plan at the end of the initial term, or at the end of any successive period thereafter, by giving the executives written notice of intent to terminate the plan, delivered at least six (6) months prior to the end of such initial term or successive period."