Amber [00:00:00]:
Welcome to The Responsible Resident. I'm Amber Stitt. This podcast takes a common sense approach to financial decisions for physicians, breaking down complex topics into something clear, practical, and usable. Because you shouldn't have to have a finance degree to build financial freedom. These bonus episodes are designed to answer the disability insurance questions that my business partner Scott Nelson-Archer and I hear almost every day at MD Disability Quotes. Today's question is one of the most common: "What exactly is an elimination period?" Or sometimes it's asked like, "If I become disabled, when does my disability insurance actually start paying me?" It's a simple question, but the answer is a little more interesting than most physicians expect. First, let's clear up the terminology. Some insurance companies call it an elimination period, or a waiting period.
Amber [00:00:52]:
For today's conversation think of them as the same thing. They're describing the period of time you must satisfy before disability insurance benefits becomes payable. I like to explain it this way: imagine your car insurance deductible. You agree to pay the first portion of a loss before the insurance company begins paying. With disability insurance, instead of paying a deductible with money, you're paying with time. Lets use an example. Suppose you own a disability insurance policy with a 90 day elimination period and a monthly benefit of $10,000.
Amber [00:01:26]:
On January 1st, you become disabled because of an illness, or injury, that prevents you from performing your specific occupation. Many physicians assume that 90 days later, a check simply arrives in the mail. That's not exactly how the process works. From the very beginning of your claim, the insurance company starts gathering information: your medical records, physician statements, testing, and your occupational duties. They're determining whether your condition meets the policy's contractual definition of disability. At the same time, your elimination period is running. Since you've agreed to cover that initial period yourself, disability benefits generally don't begin until you've satisfied the waiting period required by your policy. Now here's something many physicians don't realize.
Amber [00:02:16]:
A 90 day elimination period doesn't always mean 90 uninterrupted calendar days. Many disability insurance policies recognize that recovery isn't always a straight line. Imagine you're disabled for 45 days because of a back injury. Your physician clears you to try returning to work. A week or two later, your symptoms worsen and you're unable to continue. Depending on your policy, those first 45 days may still count toward your elimination period. However, every carrier has its own rules regarding how much time can pass between periods of disability before the waiting period starts over. Each carrier has their own provisions for how long the recovery window stays open before the elimination period resets.
Amber [00:03:00]:
That's why it's important to remember something we say often on this podcast, "The contract determines the outcome." The concept is similar across many companies. The details are found in your policy. I'd like to take a second to tell you about a Free Medical Professionals Blueprint that I created with you in mind. At some point in your career, you realize it's not just about making more money, it's about making decisions that actually support your life. That's exactly why I created "The Pathways Perspective for Physicians." It's a simple, non-technical framework to help you think through your career, your money, your risk, and how everything connects as your life evolves. You shouldn't have to have a finance degree to build financial freedom.
Amber [00:03:46]:
You don't need to have everything figured out, you just need a place to start. You can download the Free Medical Professionals Blueprint at: StittStrategies.com/Blueprint. Another question Scott and I hear frequently is, "Do I still have to pay my premiums while I'm disabled?" In many cases, yes, initially. Most individual disability insurance policies include what's called a waiver of premium benefit. Once you have satisfied your elimination period, premiums are waived while you're receiving disability benefits. Now, let's talk about another provision that often gets confused with the elimination period. It's called, "presumptive disability." This is completely different. Many individual disability insurance policies contain a presumptive disability provision for catastrophic losses.
Amber [00:04:38]:
Examples often include the total and permanent loss of: sight in both eyes, hearing, speech, or the use of multiple limbs. If a claim qualifies under the policy's presumptive disability definition, many contracts allow benefits to begin immediately from the date of the qualifying loss, rather than requiring you to complete the elimination period. That's an important distinction. The elimination period hasn't disappeared. The contract simply contains another provision that allows it to be waived under very specific circumstances. And some carriers don't require this to be an irrecoverable situation. It's also important to understand that presumptive disability isn't automatically approved simply because someone experiences a severe injury. Every claim is reviewed individually.
Amber [00:05:29]:
The insurance company evaluates the medical records and determines whether the loss satisfies the exact definition contained in the contract. Again, the contract governs the claim. Now you might be wondering, "Why would anyone choose a longer elimination period?" The answer comes down to balancing risk and cost. Generally speaking, the longer your elimination period, the lower your premium. That's why many physicians intentionally choose a longer waiting period. Once they transition to practice, they're using their emergency savings to cover the early months, and those out of training may be able to self-insure for a longer period of time. I often tell physicians that your emergency fund and your disability insurance shouldn't compete with each other, they should complement each other. Your emergency savings help you through the elimination period.
Amber [00:06:20]:
Your disability insurance protects your income if the disability extends well beyond what your savings were designed to cover. Here's the biggest takeaway from today's episode: an elimination period is an important part of the contract design. The right elimination period depends on your emergency savings, your cash flow, your financial obligations, and your comfort with risk. More importantly, understanding how your policy works before you ever need it, puts you in a much stronger position than trying to learn these concepts during a disability claim. Because that's really what this podcast is about, helping you understand your options while you still have them. If you'd like our team at MD Disability Quotes to review your current policy, or help you better understand how your elimination period fits into your overall income protection strategy, we'd be happy to help. Until next time, stay informed, stay protected, and stay responsible. If this episode helped you think a little more clearly about your next step, that's the goal.
Amber [00:07:23]:
You don't need to have everything figured out, but you do need to take ownership and take a meaningful step forward today. Thanks for listening to The Responsible Resident! As a reminder, this podcast is for general educational purposes only. It is not legal, tax, or individualized financial advice, and coverage options will vary based on your personal situation.
