What is the elimination period in disability insurance?

The elimination period in disability insurance is defined as the waiting period that must pass before benefits start being paid to an insured individual after they become disabled. This period typically ranges from a few days to several months, depending on the specifics of the policy. During this time, the policyholder must be unable to work due to their disability, but they will not receive any benefit payments.

This concept helps insurance companies manage risk and encourages policyholders to have some financial cushion or alternative income sources during the waiting phase. It's important to note that the elimination period is distinct from the duration of the benefit payout, which concerns how long benefits will be distributed once they begin, and from the period of total disability, which relates to the duration you must be unable to work to qualify for benefits. The policy reinstatement time limit simply refers to the timeframe within which a policyholder must renew their policy after it lapsed. Understanding the elimination period is crucial for both policyholders and insurance providers in determining financial planning around the potential for disability.