Life License Qualification Program (LLQP) Practice Exam

What is the best description of a disability elimination period?

1. Time deductible

2. Dollar deductible

3. Eligibility period

4. Probation period

The correct answer is: Time deductible

A disability elimination period is best described as a time deductible. This period refers to the waiting time after a disability occurs before the insurance benefits begin to be paid out. During the elimination period, the insured must remain disabled, but no benefits will be received until this specified time frame has elapsed. The concept of a time deductible is particularly important in disability insurance policies as it helps insurance companies manage risk and ensures that only those who truly cannot work due to disability will start receiving benefits, thereby discouraging claims for shorter-term disabilities that may resolve quickly. Other options, like a dollar deductible, refer to an out-of-pocket amount that must be paid before insurance benefits start but do not relate to time. The term eligibility period pertains to the timeframe in which a policyholder must meet certain criteria to qualify for benefits, which is not specific to the waiting time before benefits start. A probation period usually denotes a set time at the beginning of a contract where certain protections or benefits may not apply, rather than specifically addressing the waiting time surrounding disability benefit disbursement.