In a disability income policy, the elimination period is best described as:
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Answer & full 3-part explanation (select an option above, or peek)
Why A is correct
The elimination period is the specified waiting period immediately following the onset of a disability during which the insured must remain disabled before benefits begin. It operates like a deductible measured in time rather than dollars: the longer the elimination period selected, the lower the premium, because the insurer avoids the cost of short disabilities. Common elimination periods are 30, 60, 90, 180, or 365 days. Once the insured remains continuously disabled through the elimination period, benefits are payable for the covered disability. The elimination period concept is part of the pricing and provisions content of disability insurance (AH-IV.4).
Why the other options are wrong
- B) The maximum duration for which benefits will be paid is the benefit period, a separate provision from the elimination period. The elimination period is the unpaid waiting time at the start of the disability, while the benefit period measures how long payments run once they begin.
- C) Renewability and cancellation are governed by the policy's renewability clause, which specifies the insurer's right to cancel or refuse renewal. The elimination period concerns claim timing and has nothing to do with cancellation rights.
- D) The grace period for late premiums is a separate contract provision that protects the policyholder from an immediate lapse after a missed payment. The elimination period is a claim-time waiting period, so the two concepts address different phases of the policy.
Memory hook
Elimination period is a deductible measured in days, not dollars.