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Disability insurance elimination periods: How to pick the right waiting period

Selecting the right elimination period when buying disability insurance is crucial. Not only does it determine when benefits start paying out, but it also can have significant impact on your monthly premiums.

If you end up filing a claim on your disability insurance, you won’t receive monthly benefits immediately.

Most disability insurance policies, especially long-term disability, include an elimination period.

What is the elimination period of an individual disability policy?

Your individual disability policy’s elimination period — also known as the waiting period — is the span of time between when the disability occurs and when benefits start paying out. For example, a policy with a 60-day waiting period would not pay benefits for the first 60 days after the insured becomes disabled.

A disability insurance elimination period is a similar concept to the deductible on other types of insurance. It’s designed so that the insurance company does not have to pay 100 percent on a claim; the insured has to pay some of the cost out-of-pocket before benefits kick in.

Elimination period vs. probationary period

A policy’s elimination period is not the same as a probationary period.

A probationary period is a length of time between when the policy is issued and when you can file a claim for benefits. It’s a period of time designed to protect the insurance company from fraudulent claims. Probationary periods may be 15 days or longer.

During the policy’s probationary period, you cannot file a claim with the company, even if your application is approved and your disability is legitimate. Once you’re notified that the probationary period is over, you can file a claim if needed.

With an elimination period, you can file a claim, but you won’t receive benefits until the period has expired.

How disability insurance elimination periods affect cost

The longer the elimination period on your policy, the less you will pay in premium. With all other policy factors being the same, choosing a one-month elimination period will cost more than three times a policy with a one-year elimination period.

At the same time, there’s very little difference in the premium amount between a 90-day elimination period and a six-month or one-year period. Depending on the policy, you can get a 90-day period for $10 to $20 a month more than what a six-month or one-year period will cost.

For most disability insurance policies, 30-day elimination periods are considerably more expensive than 60-day periods, which cost significantly more than 90-day periods.

That’s because short-term disabilities lasting one to two months are much more common than long-term disabilities. Therefore, a policyholder with a 30-day elimination period has a significantly higher chance of filing a benefits claim than one with a 90-day or more waiting period. To account for the higher risk, the insurer has to charge a higher premium.

The difference in premiums between elimination periods also increases if there are underwriting factors that make the policy more of a risk to an insurer. For example, 30-day elimination periods will be much higher than 90-day periods if the insured is older, works a risky job, or uses nicotine.

Learn More: How Much Does Disability Insurance Cost Per Month?

Examples of disability insurance elimination periods

Based on the Breeze quote engine, here are examples of how different elimination periods will affect your premium cost:

A 30-year-old male professional employee could get $3,630 in monthly coverage for up to 10 years for:

Elimination PeriodMonthly Premium
30 days$98/month
60 days$56/month
90 days$35/month
180 days$28/month
365 days$26/month

The same policyholder who works a riskier manual labor job could get the same coverage for:

Elimination PeriodMonthly Premium
30 days$198/month
60 days$123/month
90 days$86/month
180 days$81/month
365 days$75/month

The 30-year-old professional who is also a nicotine user would pay:

Elimination PeriodMonthly Premium
30 days$116/month
60 days$66/month
90 days$41/month
180 days$33/month
365 days$31/month

After if instead of being 30-years-old, the applicant is a 50-year-old, the cost would be:

Elimination PeriodMonthly Premium
30 days$197/month
60 days$135/month
90 days$104/month
180 days$87/month
365 days$80/month

Finally, if the 30-year-old professional needs a $5,040 monthly benefit instead of $3,630, the premium would cost:

Elimination PeriodMonthly Premium
30 days$140/month
60 days$80/month
90 days$49/month
180 days$40/month
365 days$37/month

For comparative purposes, below are the rates for a 45-year-old woman with a technical profession applying for a $5,700 monthly benefit:

Elimination PeriodMonthly Premium
30 days$547/month
60 days$343/month
90 days$241/month
180 days$200/month
365 days$185/month

How to choose the right elimination period

Most disability insurance companies offer five to six options for elimination periods, ranging from 30 days to two years.

While a 30-day elimination period may provide the best coverage, the cost over time may outweigh the potential benefits you would receive.

At the same time, you don’t have to stretch your elimination period to 180 days or even a year to afford coverage.

Once elimination periods reach 90 to 120 days, there are little cost savings to be had by increasing the elimination period. That’s because if your disability lasts that long, it will typically take longer for you to recover. Therefore, there is little additional risk to the insurance company if they have to provide benefits after 90 days as opposed to 120. So the premium costs between these elimination periods will be negligible.

Choosing an elimination period for your policy means assessing:

  • Your monthly budget for disability insurance premium.
  • How long you can get by without a paycheck before benefits start paying out.
  • How much in savings, an emergency fund, investments, and spousal income that you can count on.
  • Whether paying a higher disability insurance premium for 10 to 20 years or more is worth the extra two to three months of policy benefits.

Experts say the optimal elimination period is 90 days or 120 days. Choosing anything higher than 120 days means that in exchange for a slightly smaller premium payment, you will be spending your own money for a much longer period if you do become disabled. Plus, by the time you wait through a 180-day, 365-day, or two-year elimination period, you could be nearly bankrupt before your disability insurance policy benefits take effect.

Joel Palmer is a freelance writer and personal finance expert who focuses on the mortgage, insurance, financial services, and technology industries. He spent the first 10 years of his career as a business and financial reporter.

The information and content provided herein is for educational purposes only, and should not be considered legal, tax, investment, or financial advice, recommendation, or endorsement. Breeze does not guarantee the accuracy, completeness, reliability or usefulness of any testimonials, opinions, advice, product or service offers, or other information provided here by third parties. Individuals are encouraged to seek advice from their own tax or legal counsel.

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