When individuals purchase a long-term disability insurance policy, there is typically a waiting period, also known as an elimination period. But what are elimination periods and why are they significant?
A little background
An elimination period is the time between the date of your injury (and inability to work) and the date your benefits begin. In most instances, you must be totally disabled during the elimination period, which can range from 30 days to two years.
The right elimination period
Policyholders will typically pay a lower premium if they opt for a longer elimination period. The elimination period you choose will depend on your financial condition. For example, if you have accrued savings that can cover at least three months without income, you could choose the 90-day elimination period, which is the most common timeframe.
Consider before deciding
When it is time for you to choose an elimination period for your disability policy, keep the following in mind:
- The elimination period starts on the date of your injury or diagnosis and your resulting inability to work rather than the date you file your claim.
- You may not receive your first disability check until 30 days after the end of the elimination period, so plan a little further out when putting an emergency fund together.
- Elimination periods can accumulate so, for example, if you are out of work and then try to return to work but realize you cannot, the elimination period continues from the point where you stopped working.
As long as your injury or condition meets the definition of a disability, you will receive benefits according to the terms of the disability policy you choose.