Think of it as a Deductible...
Terminology for individual disability insurance can seem rather confusing to someone conducting their initial research only from quotes. Let us analyze a very important component of any policy - the elimination period.
- What is it and why is it important?
- Are there different elimination period options and if so, which one is the most popular choice?
What is the Elimination Period?
It is the number of days between the onset of the disability and when you become eligible to receive benefits. Think of it as a deductible. If a policy includes a 90-day elimination period, that indicates you must be disabled for 91 days or longer to qualify for benefits from the insurance carrier.
The reality is that benefits are usually paid at the end of the month, so a 90-Day wait is actually 120 days before you collect a check. A 180-Day elimination period would be 210 days until you collect any money.
What is the Most Common Choice?
When purchasing an individual policy, the most common elimination period (EP) chosen is 90 days by far. You will find every major company provides the best value when you choose the 90-day option. The savings are minimal when you extend it to 180 days, and the cost skyrockets when you choose a shorter option because so many more illnesses and accidents would qualify for benefits. The options that are available from many carriers are;
- 30 Days
- 60 Days
- 90 Days
- 180 Days
- 360 Days
- 720 Days