Arizona Life and Health Practice Exam

What is the term for the period during which an insurer can delay a covered disability policy claim?

1. Waiting period

2. Grace period

3. Elimination period

4. Coverage period

The correct answer is: Elimination period

The term for the period during which an insurer can delay a covered disability policy claim is known as the elimination period. This is a specific timeframe following the onset of a disability during which the policyholder will not receive any benefits. The elimination period can vary by policy but is essential in determining when the insurance coverage will begin to pay benefits. This period serves multiple purposes, including allowing insurers to limit exposure to claims that might arise from short-term disabilities and encouraging policyholders to return to work quickly. It is important for insured individuals to be aware of the length of this elimination period when planning for potential health issues, so they understand the timeline for when they can expect to receive benefits after an incident occurs. Understanding the elimination period is crucial for effective financial planning in the event of a disability.