What is the “Elimination Period” of a Disability Policy?
The elimination period, also known as a “waiting period,” acts as a deductible. It determines how many days you must be disabled before the monthly benefit will be paid and is a standard feature of a long-term disability policy since the plan is intended to provide longer term protection, rather than step in for short-term situations. The longer the elimination period, the lower your annual cost. A 90 or 180-day elimination period is recommended since you should use your emergency fund for the short-term needs. You can rely on your emergency fund for short-term income interruption, as it should have 3-6 months of expenses saved up. That way, you aren’t paying an insurance company a repetitive premium for a risk that is measurable and may not ever occur.
