What is the elimination period in a disability income policy?

The elimination period in a disability income policy refers to the waiting period that must pass before the policyholder begins to receive benefits after becoming disabled. During this time, the policyholder may still be unable to work and could be facing financial stress, but the insurance company does not yet start paying out benefits. This waiting period is crucial as it helps the insurer manage risk and potentially reduce the number of short-term claims.

Understanding the elimination period is important for policyholders, as it directly affects their financial planning in the event of a disability. They must consider how long they can sustain themselves without income before the benefits from their policy kick in. The elimination period can vary significantly depending on the policy and can impact the premium cost; typically, policies with longer elimination periods have lower premiums.