elimination Archives * erp.irs.kg.gov.ng

6+ What is the Disability Policy Elimination Period? Explained!

A waiting period exists within an individual disability income insurance policy. This specified duration of time, following a qualifying disability, must elapse before benefit payments commence. For example, if an individual becomes disabled and the policy stipulates a 90-day duration, income replacement begins on day 91, assuming all other policy requirements are met.

This provision significantly impacts premiums. A longer duration translates to a lower premium due to the reduced likelihood of the insurance company paying out benefits for short-term disabilities. Conversely, a shorter duration results in a higher premium. The choice of duration should align with the individual’s financial resources and capacity to cover expenses during the initial period of disability.

7+ What is an Elimination Period & Why it Matters

A waiting period, often found in disability insurance policies, represents the time that must pass after a qualifying event before benefits become payable. For instance, if an individual becomes disabled and their policy includes a 90-day stipulation, no benefits are disbursed until 90 days have elapsed from the onset of the disability. This period is selected by the insured at the time of policy purchase and impacts the premium cost; a longer one typically results in lower premiums.

The function of this initial timeframe is multifaceted. Primarily, it acts as a cost-control measure for insurance companies, reducing the number of claims paid, particularly for short-term disabilities. It also serves to discourage frivolous or opportunistic claims, focusing benefit payments on those experiencing genuine and sustained inability to work. Historically, these clauses developed as a means to make disability insurance more affordable and sustainable by mitigating the risk of excessive payouts.