Disability insurance protects the insured against the chance that an injury or disease may make future work impossible. It can either be provided by the government or a private organization and includes both long and short-term benefits. Knowing how a disability insurance policy works, as well as its terms and conditions, is crucial regardless of the provider and two key factors to know about are the accumulation and elimination periods. The length of time you must wait between when a disability starts and when you start receiving benefits is the elimination period. The set amount of time in which you have to collect enough days, weeks or months to satisfy this elimination phase is termed the period of accumulation.
Both of these timeframes affect your insurance policy in a big way. Generally, the shorter the period of accumulation, the more expensive your premiums will be. These higher costs balance out the fact that your insurance provider will have to start paying you benefits sooner if you opt for a shorter accumulation period. Of course, waiting for too long will not work either as you will have to spend more money out of your own pocket while the accumulation and elimination periods have not been satisfied. Typically, the optimal amount of time given to accumulation in most insurance is 90 days. This period is a
nice balance which satisfies both the provider and the customer.
Let us say that you have six months and 60 days for your accumulation and elimination periods respectively. This means that you have to be out of work for disability reasons for 60 days before your insurance company pays you anything. It also means that you have 6 months in which to accumulate these 60 days before the clock resets again. Usually, your first payout will occur one month after this if you satisfy both timeframes. Seeing as these numbers change depending on the disability insurance policy, it is important to know what they mean for you. One affect is that injuries such as sprained ankles may not be covered by this sort of policy as they usually completely heal within 60 days.
Because of all of this, it is important to read the fine print before signing that policy. Ensuring that you know how long your accumulation period is will mean that you can make a smarter decision about your future insurance plan. When making a decision, balance out the length of this period, the premiums you will pay, and the types of injuries which take that long to heal. In this way, your chosen disability plan will provide you with the proper coverage if an injury or accident does occur in the future.