PSI Ohio Insurance Practice Exam

What is the specified period after the effective date before coverage goes into effect in a disability income policy called?

1. Activation period

2. Waiting period

3. Probationary period

4. Elimination period

The correct answer is: Probationary period

The specified period after the effective date before coverage goes into effect in a disability income policy is known as the probationary period. This is the timeframe during which an insured individual cannot receive benefits for a disability that occurs. It is typically included to protect insurers from having to pay claims for pre-existing conditions that existed before the policy was purchased. During this probationary period, the insured must wait a set amount of time, which can vary by policy, before benefits for a new disability will be payable. This feature is common in many disability income policies as it helps mitigate risk for the insurance provider while ensuring that consumers are aware of any limitations on immediate coverage. The other terms mentioned relate to different aspects of insurance policy coverage. The waiting period generally refers to the duration an insured must wait before benefits begin after a claim is filed, while the elimination period is used in health insurance to refer to a specified duration between the start of a claim and when benefits are paid. The activation period is not a standard term used in these contexts.