Elimination and Benefit Periods
When you’re shopping for the best disability policy for your needs, it’s clear that the monthly premium will become a factor in determining the type of policy and the company from which you take out the policy. The two main factors that can affect your premium the most are the length of the elimination period (EP) and the length of the benefit period (BP).
The elimination period is basically the period between when you file a claim for benefits and when you begin receiving those benefits. The longer the EP, the lower the premium. Most policyholders choose a 60-day or 90-day EP, but companies can go from zero up to two years. The question you should ask yourself is, “How long can I go before needing the benefit?” This can be answered by looking at your monthly expenses and the amount of liquid savings you have in reserve. But also note that a benefit check will arrive about a month after the EP elapses; a policy with a 30-day EP, for example, will begin paying benefits 60 days after a claim in accepted.
The other major factor in determining premium is the benefit period, or the amount of time that benefits will be paid. These terms can be one up to five years, with some companies offering plans to pay until age 65 or for your lifetime. The shorter the BP, the lower the premium. However, you should pay attention to your expenses and the average length of a disability to determine what term would work best for you. Your agent or broker can work with you to determine your risk of a long disability (two years or more) and risk of a permanent disability (to age 65) to provide you the information to make the best decision for you and your family.
For more information about elimination and benefit periods, turn to www.DoctorDisability.com and speak with one of our professionals who can help you determine the best options for your DI policy, and the best premium.