What does the elimination period signify in insurance terms?

The elimination period in insurance terms signifies the waiting period before benefits begin. This is a crucial aspect of many types of insurance policies, especially in disability insurance and long-term care insurance. It is the time frame after a policyholder experiences a covered event (such as an accident or illness) and before they start receiving benefits from the insurance company.

This waiting period is important for both the insurer and the policyholder. For the insurer, it helps to minimize small claims and encourages policyholders to rely on their own resources for a brief period before benefits kick in. For the policyholder, understanding the elimination period is essential in financial planning, as they need to ensure they have adequate resources to cover their expenses during this gap without insurance support.

This concept is distinct from the total time benefits are paid, which refers to the duration that benefits continue once they have started, and the duration of the insurance policy itself, which is the total period the policy remains in effect. Similarly, the period for filing claims pertains to the timeframe in which policyholders must submit their claims to receive benefits, but this does not relate directly to when benefits begin.