Elimination period.
In plain English
An elimination period is the stretch of time between when a covered event begins and when your policy actually starts paying benefits. It works like a deductible, except it is counted in days rather than dollars. You cover the costs yourself during this window, and only after it ends do benefits kick in. Elimination periods show up most often in long-term care insurance and disability insurance, and a longer one usually means a lower premium because the insurer pays out less.
01Why it matters
During the elimination period you are paying out of pocket, so you need enough savings to cover that stretch before coverage starts. Choosing a longer period lowers your premium but raises the cash you must have on hand when you first need help.
02The math, step by step
Say your disability policy has a 90-day elimination period and you get hurt and cannot work. You receive no benefit payments for the first 90 days, so you must cover three months of bills from savings, and only on day 91 do benefit checks begin. A long-term care policy works the same way, often with a 30, 60, or 90-day elimination period before it pays.
03What this is NOT
An elimination period is not a dollar deductible. A deductible is an amount of money you pay before coverage starts; an elimination period is a number of days you wait before coverage starts, regardless of how much you spend during it.
04Receipts
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Plain-English answers from our glossary. Receipts included. Never advice.
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