Question

An insured is hospitalized with a back injury. Upon checking his disability income policy, he learns that he will not be eligible for benefits for at least 30 days. This indicates that his policy is written with a 30-day ________.

1) waiting period
2) coverage period
3) grace period
4) exclusion period

Answer 1

The insured's disability income policy stipulates a 30-day period before benefits begin, known as a 30-day waiting period. This is standard in disability policies to prevent short-term claims and reduce overall insurance costs. The correct option is 1.

Step-by-step explanation:

If an insured learns that they will not be eligible for disability income benefits for at least 30 days after being hospitalized with a back injury, this indicates that his policy includes a 30-day waiting period.

The waiting period, also known as the elimination period, is the time span after a disability occurs during which an insured must wait before beginning to receive policy benefits.

In the case of disability income policies and other types of insurance like unemployment insurance, the waiting period serves to prevent claims for very short-term disabilities and helps to reduce the cost of the insurance by eliminating smaller claims, which encourages individuals to maintain an insurance policy. The correct option is 1.