What is an Elimination Period?

Also known as a qualifying or waiting period, an elimination period is the time that occurs between the initiation of an action, and the completion of that action. The term is often utilized in the insurance industry to identify the time between the qualification for submitting a claim, and approval or denial of that claim by the provider. In many situations, the benefits related to the coverage begin to pay as soon as the elimination period is fully satisfied.

One common example of how an elimination period works can be found in situations involving disability after an injury. Many insurance policies that provide this type of coverage require that a specific number of days occur between the accident and the issuance of the first disability benefits. If the status of the policyholder is still disabled once the elimination period is satisfied, then the benefits can commence immediately.

The inclusion of an elimination period in long-term care insurance packages as well as some other forms of insurance coverage makes it possible to have time to investigate the veracity of a claim, and determine if the insured party is entitled to benefits under the terms of the policy. By imposing this waiting period, insurance companies protect themselves from fraudulent claims and thus save both the provider and all other clients of the insurance company from incurring unnecessary expense. Viewed from this perspective, an elimination period can be seen as one of the ways that insurance companies keep their premiums lower, and thus make their plans more affordable to a larger sector of the population.

Depending on the terms of insurance coverage, the benefits may be retroactive to the first day of the loss incurred by the insured party. This means that even though the policy may include a ninety-day elimination period, the benefits on claims that are ultimately approved are calculated from the first day of the event in question, rather than from the day after the elimination period is complete. Because this is not the case with every type of disability-income insurance or other types of insurance coverage, it is important to read the terms and conditions that apply. This will aid insured parties in understanding their responsibilities regarding the paying of deductibles, as well as what is provided in the way of help with custodial care for the disabled individual. Policyholders will also have a good idea of when they can reasonably expect the benefits to commence, and how those benefits are determined.