Provisions
These provisions are extremely important!!!
- Begins the effective date of the policy
- Excludes coverage for sickness during this time period
- Accidents covered immediately
- Lasts 15 - 30 days
MR. WATSON: The Probationary Period These policies have a probationary period on them. It begins on the effective date of the policy and applies ONLY to sickness. Think of it like being on probation at work, which begins the first day on the job. It's a one-time shot. It may be only 15 days, or 30 days, whatever. Each company has its own length of time for it. It helps protect the insurance company against "adverse selection ", folks who know they are sick and are now trying to buy insurance.
MR. WATSON: I want you to remember something that's going to hold you well in health insurance. If you ever have to wait for coverage to begin, it would be due to sickness. Accidents are generally covered on the first day. You can't predict accidents. Always remember this - if you ever have to wait before something will be covered, it will be sickness. Accidents may be covered first day. Got it?
A Note: Disability income policies do NOT fall under the Affordable Health Care Act which says there can be no exclusions for pre-existing conditions. So, these polices will not pay for sickness related disabilities during the initial 15 or 30 day period.
MR. WATSON: So with this probationary period, this applies only to what? Sickness. So it may be a 15-day or a 30-day probationary period, whatever. So you bought the policy today, you are now on probation for 30 days. If you become sick during that period of time, we will not be liable for that claim. Y'all okay?
ALL: Yes.
MR. WATSON: Now, you're moving on with life. Life is good. The policy is in force, you've passed the probationary period, everything is fine. And you become disabled. When would you like to start receiving your benefit?
ALL: Right now.
MR. WATSON: You would like to receive it right away. Right?
ALL: Yes.
Elimination period ****
- Begins the day of the disability
- Controls the premium (like a time deductible)
- No payments during this period
MR. WATSON: You cannot afford a premium that would pay you a benefit the first day you became disabled. The premium would be sky high. So, like a deductible on regular health insurance, you have a waiting period that kicks in once you're disabled and it can last up to six months, depending on the policy. Instead of calling it a waiting period, the industry calls it an elimination period . That's just another word for "waiting period" but it begins the day you become disabled.
MR. WATSON: It's a time frame, that you chose when you bought the policy. It is a period of time that begins when you are disabled and can last up to six months. You are not going to get paid by the insurance company during this time. It could be 30 days, 90 days or six months etc... It controls the premium. The longer you elect to "wait" the cheaper the premium. If you are still disabled at the end of that sixth month, you will begin receiving disability payments. It is not retroactive, so it won't back pay you for the time you spent without income during the waiting period. You chose this time period when you bought the policy. Look at it like a "time" deductible. The longer the time you have to wait before benefits are payable, the smaller the premium.
MR. WATSON:The purpose of this is to
- keep premiums down and
- prevent claims against small or short-term disabilities from arising.
MR. WATSON: Now, after the waiting period you'll start getting paid. Disability companies have to pay you at least monthly. They can't stretch it out and pay you quarterly or semi-annually or whatever. They must pay you at least monthly. They can pay you every day, pay you every week. They have to pay you at least monthly.
MR. WATSON: So, within 30 days after the end of your waiting period, they must start paying you. Does that make sense? Then they have to pay you at least monthly.
MR. WATSON: So the probationary period would begin when?
ALL: The effective date date of the policy.
MR. WATSON: And it applies only to what?
ALL: Sickness.
MR. WATSON: So if I got run over by a bus in day four, would it pay?
ALL: Yes, because it was an accident.
MR. WATSON: So I am going through life. Years go by. I become disabled, I wait six-months with-out any money coming in, then the company begins paying me. The benefit is not retroactive.
MR. WATSON: Delayed Disability Provision If you're rear-ended in a car accident, it might be weeks or months before your body shuts down. The delayed disability provision allows a certain amount of time during which total disability may result from an accident and the insured would still be eligible for benefits. This time frame is 30, 60, or 90 days.
MR. WATSON: Benefit Period The benefit period is the maximum amount of time you will get paid when you are disabled.
- Short term is six months to two years.
- Long term will pay 5, 10, or 20 years, sometimes up to age 65.