Elimination Period
An Elimination Period, in the context of insurance, refers to the waiting period before the insurance coverage kicks in and starts paying benefits. It is the amount of time you must wait after becoming eligible for benefits before you can actually receive them.
Example #1
For example, if your Long-Term Care Insurance policy has a 90-day elimination period, you would need to cover the costs of care for the first 90 days before the insurance policy starts providing benefits.
Example #2
Another example is if your health insurance has a 30-day elimination period for certain procedures, you would be responsible for the expenses incurred during those initial 30 days.
Misuse
Misuse of the elimination period can occur if an insurance company manipulates the length of this waiting period unfairly. For example, an insurer might extend the elimination period unnecessarily to delay or reduce payments to policyholders. This could result in financial strain on the insured individuals who were counting on timely benefits to cover their expenses. It's crucial to ensure that the elimination period is clearly stated in the policy and not unjustly altered by the insurer.
Benefits
Having an elimination period can be beneficial in reducing the cost of insurance premiums. By choosing a longer elimination period, the insured individual can lower their premiums because the insurance company is exposed to less risk due to the delayed coverage initiation. This can be a cost-effective strategy for individuals who can manage expenses during the elimination period.
Conclusion
Understanding the elimination period is essential for consumers to grasp when their insurance benefits will begin and how long they may need to self-fund their care. It's crucial to review and comprehend the elimination period stipulated in insurance policies to make informed decisions and be prepared for any out-of-pocket expenses during the waiting period.
Related Terms
See Also
Traditional Long-Term Care Insurance