Elimination Period
A waiting period at the beginning of an insurance claim during which no benefits are paid. Also called a deductible period, it's the time you must wait after becoming disabled or needing care before insurance benefits begin, commonly found in disability and long-term care insurance.
Example
“Janet's disability insurance has a 90-day elimination period, so she must be disabled for three months before her monthly benefits begin.”
Memory Tip
Think 'ELIMINATE = Extra Long Insurance Makes Income Not Available Till Elimination' - benefits are eliminated during this waiting time.
Why It Matters
The elimination period significantly affects both your premium costs and out-of-pocket expenses during a claim. Choosing a longer elimination period lowers premiums but means you'll need more savings to cover expenses during the waiting period.
Common Misconception
Many people confuse the elimination period with a deductible, but it's based on time, not money. Others assume they can collect benefits immediately after a qualifying event, not realizing they must wait through the entire elimination period first.
In Practice
Mike has disability insurance with a 180-day elimination period and becomes unable to work on January 1st due to a back injury. His monthly benefit is $3,000, but he receives no payments during the elimination period from January 1st through June 29th. On June 30th (day 181), his benefits begin and he starts receiving $3,000 per month. During those first 180 days, Mike must rely on savings, sick leave, or other resources to cover his living expenses.
Etymology
From Latin "eliminare" meaning "to remove or exclude" and "period" from Greek "periodos" meaning "a going around or cycle."
Common Misspellings
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Related Terms
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