An individual disability policy contains a 30-day probationary period. If the insured is diagnosed with a covered illness on day 15, the insurer will:
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Answer & full 3-part explanation (select an option above, or peek)
Why A is correct
A probationary period is a stated number of days immediately after a policy is issued during which certain benefits, most often coverage for sickness, are not yet payable. If the illness manifests, meaning it is first treated or diagnosed, during the probationary period, the insurer owes no benefit for that sickness, even though the policy is otherwise in force. Probationary periods apply only to new coverage, generally do not apply to accidents, and are commonly 30 days in individual disability and hospital policies. They differ from elimination periods, which delay benefit payments after a covered disability begins.
Why the other options are wrong
- B) The policy being in force does not mean all benefits start immediately; the probationary period intentionally withholds sickness benefits at the outset.
- C) There is no rule that a probationary-period illness is paid at 50 percent; the condition is simply not payable if it begins during the period.
- D) A diagnosis during the probationary period is not grounds for cancellation; the insurer simply does not pay for a sickness that begins in that window.
Memory hook
Probation period = prove you're not already sick. Illness in the first 30 days gets no check.