PSI Ohio Insurance Practice Exam

In a disability income policy, what may be thought of as a time deductible?

1. Premium payment period

2. Waiting period

3. Elimination period

4. Coverage period

The correct answer is: Elimination period

In a disability income policy, the elimination period is the correct choice to consider as a time deductible. This period represents the duration that a policyholder must wait after the onset of a disability before they begin receiving benefits. During this time, no benefits are paid, which is akin to a deductible in the sense that it establishes a waiting phase that must be satisfied before the insurer begins to cover lost income due to the disability. The elimination period functions similarly to a deductible in health insurance, where the insured must incur healthcare expenses up to a certain amount before the insurance kicks in. By having an elimination period, insurers manage their risk and limit claims for short-term disabilities or situations that may resolve quickly. The other choices do not accurately represent this concept. The premium payment period relates to how often premiums must be paid to keep the coverage active. The waiting period, while similar, refers generally to the time any applicant must wait before coverage becomes effective, which is different than the policy's actual benefit waiting timeframe. The coverage period describes the length of time that coverage is provided under the policy but does not imply any waiting time or time deductible associated with receiving benefits.