A disability income policy has a 30-day elimination period and also refers to a probationary period. How do the elimination period and the probationary period differ?
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Answer & full 3-part explanation (select an option above, or peek)
Why A is correct
The elimination period operates after a covered disability begins: the insured must remain continuously disabled for the stated period, for example 30 days, before monthly benefits start. The probationary period runs from policy issuance, before any claim can arise, and typically delays coverage for conditions, often sicknesses, that appear during the first weeks or months of the policy. Both are waiting mechanisms, but they serve different purposes: the elimination period reduces the cost of short disabilities and keeps premiums lower, while the probationary period guards against claims on conditions that already existed at issue.
Why the other options are wrong
- B) The two periods differ in purpose and timing: the elimination period applies after disability begins and is a deductible-like time block before benefits, while the probationary period applies after policy issue before coverage is available for certain conditions.
- C) The time between filing a claim and receiving payment is a claims-processing delay caused by investigation and documentation, not an elimination or probationary period, and it does not vary by policy design.
- D) Both periods commonly apply to sicknesses, and the elimination period is not limited to accidents. Accident benefits often start immediately, while sickness claims are the ones typically subjected to these waiting features.
Memory hook
Elimination = days you suffer before pay starts. Probationary = grace before a new policy fully covers you.