Another term for waiting period, commonly used in Australian income protection insurance. It's the period of time that must elapse after you become disabled before insurance benefits commence, effectively 'eliminating' the initial period of disability from coverage.
An elimination period is the industry term for what most Australian consumers call the waiting period: the days you must be unable to work before benefit payments begin. It exists to exclude short-term disabilities from claim costs, which keeps premiums lower.
Australian income protection policies typically offer:
| Elimination period | Premium impact | Self-funding required | |---|---|---| | 14 days | Highest | Minimal | | 30 days | High | About one month of expenses | | 60 to 90 days | Moderate | Two to three months of expenses | | 180 to 720 days | Low | Six months to two years of expenses |
Australian regulators require insurers to spell out elimination period mechanics. Confirm:
Understanding these mechanics is essential for matching the elimination period to your actual financial buffer.
A corporate executive with generous sick leave selects a 2-year elimination period (720 days) for income protection, paying just $45/month for $8,000 monthly benefits, versus $280/month for a 30-day elimination period
A casual worker with no sick leave chooses a 14-day elimination period to minimize the gap between losing income and receiving insurance benefits, accepting higher premiums as necessary protection
An insurance claim is made after a car accident causing inability to work. With a 60-day elimination period, the claimant uses their 40 days of sick leave plus 20 days of annual leave to bridge the gap before insurance payments commence
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