Elimination period

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Elimination Period

In disability income insurance or loss of income insurance, the period of time that must transpire before the insurer begins to make payments covering the claim. That is, if one suffers an injury or a long term illness that results in substantial loss of income, the insurance policy sets an elimination period, at least in part to ensure that the disability or sickness is in fact long-term. The elimination period is often thought of as the deductible for disability and loss of income insurance as the policyholder is responsible for expenses incurred during it. For the disability income insurance run by the Social Security Administration, the elimination period is five months. Private plans often include 90-day periods, or shorter periods in exchange for higher premiums.
Farlex Financial Dictionary. © 2012 Farlex, Inc. All Rights Reserved

Elimination period.

If you have disability insurance or long-term care insurance, there's a waiting period, called the elimination period, from the time you become disabled, or are certified in need of long-term care, and when you begin receiving benefits.

You often have a choice of elimination periods -- such as 30, 60, or 90 days -- when you purchase the insurance, though sometimes the payment gap is dictated by the terms of the policy.

In general, the shorter the elimination period the higher the premiums will be for comparable coverage.

Dictionary of Financial Terms. Copyright © 2008 Lightbulb Press, Inc. All Rights Reserved.
References in periodicals archive ?
Companies have various elimination periods the period of time after you're sick or injured before benefits begin to accrue.
* Avoid very low deductibles or elimination periods (EP), since lower deductibles have a much higher premium cost.
One example is the use of shorter elimination periods (more policy money, quicker).
For example, some policies offer calendar-day elimination periods, which means the elimination period starts the day that a doctor assesses cognitive impairment or deficits in activities of daily living.
Benefits included short elimination periods, high replacement ratios, high maximums, extended own-occupation and specialty definitions, cost-of-living adjustments and so on.
In either case, longer elimination periods and lower monthly benefit amounts result in reduced premiums.
Shorter elimination periods typically result in lower policy premiums for disability income policies.
The impact on short-term disability insurance products could be dramatic, depending on the elimination periods in the policies.
Elimination Period Elimination periods for long-term care policies affect claims cost in three ways: They reduce total claims paid, they reduce moral hazard since insureds share in the cost of a loss before benefits become payable, and the applicant's choice of elimination period serves as a signal of riskiness to insurers.
* Recognize that elimination periods - the number of days you must be in residence in a nursing home before policy benefits begin, for example - can vary, usually from 0 to 100 days.
The amount of years selected for these benefits along with elimination periods should also be carefully reviewed.
A review of your personal policy should focus on such things as what constitutes a disability and partial disability, accepted causes of disability, waiting or elimination periods once the disability arises, benefit payment periods, and your responsibility to return to work in some capacity while disabled.