A waiting period exists in disability insurance policies, representing the time between the onset of a disabling condition and the point when benefit payments commence. This duration, selected by the policyholder at the time of purchase, functions similarly to a deductible in other insurance types. For instance, an individual with a 90-day duration must wait three months after becoming disabled before receiving payments.
The length of this preliminary timeframe has a direct impact on policy premiums. Shorter durations typically correlate with higher premium costs, reflecting the insurer’s increased likelihood of paying benefits sooner. Conversely, electing a longer duration often results in reduced premium expenses. The existence of this period helps to manage policy costs and prevent claims for short-term disabilities, focusing coverage on more substantial, long-lasting impairments. This construct ensures the financial sustainability of disability insurance products.
