An elimination period is an interim of time that insurer may require you to make payments over before your insurance coverage starts to pay out benefits. This is a normal requirement of policies which cover you against injury or sickness or disability. This is to balance the risk of temporary incapacity for which you should be able to make reasonable provision, and the long-term impacts of serious health problems. The elimination period is also called the “qualifying period” or the “waiting period” for insurance claims.
What does an elimination period mean to me?
The elimination period of an insurance contract is important to you because it may markedly affect the premiums and level of cover provider under any specific policy.
A sensible rule of thumb is that the shorter your elimination period is the higher the costs of the individual premiums and the lower the level of benefits provided under your insurance policy.
And the same is true vice-versa if the elimination period is longer than usual – then the costs of the premiums may decrease rapidly and the level of coverage provided may dramatically increase the level of benefits available to you in the event of a claim against your insurance policy.
What is the most common elimination period?
For most long-term care policies the usual elimination period will be 90 days, which means that for the first three months of your illness you will be responsible for making payments to the healthcare provide before your policy begins to pay benefits.
It is worth noting that there are policies out there with even longer elimination periods and which cost considerably less but these are unlikely to benefit the policy holder substantially because the increased waiting period will almost certainly cost much more than the additional premiums would have been.
Is there anything else I should know about elimination periods?
Yes, some forms of long-term disability or sickness cover require the elimination period to be served over consecutive days. So if you are out of action for 85 days, leave your care center for a day and then return the next day your elimination period is reset. These policies are cheaper but the reduced level of coverage can be of concern to some customers.
How do I find out the elimination period on my insurance?
Either read your insurance contract where this will be set out clearly, or call your insurance company, agent or broker and ask.