Q: What is The “Elimination Period” of a Disability Policy?
The elimination period, also known as a waiting period, acts as a deductible since it determines how many days you must be disabled before the monthly benefit will be paid. This is a standard feature of a “Long Term Disability” plan since the plan is intended to provide longer term protection and not step in for short term type situations. The longer the elimination period the lower your annual cost. A 90 or 180 day elimination period is recommended since you should use your emergency fund for the short term type needs. By having a emergency fund with three to six months of expenses you can rely on these funds if you have a short term income interruption instead of paying an insurance company a repetitive premium for a risk that is measurable and may not occur.