When purchasing disability insurance and planning for a possible disability in the future, the insured must know when the coverage will begin, how much he or she can expect to receive, and for how long benefits will be payable.

The period of time before benefits begin during which the insured is disabled under the terms of a policy is referred to as the waiting or elimination period. The longer the elimination period is in a given policy, the lower the premium. The disability insurance policy should be studied in order to determine what the best value is regarding elimination periods. Ordinarily, elimination periods of thirty or sixty days are much more expensive and not proportionate to a ninety-day elimination period. Ninety-day elimination periods are typically the best value in most disability insurance policies. While a one hundred eighty-day elimination period will generally produce a lower premium than a ninety-day elimination period, the six-month elimination period savings are typically not significant enough to make the extra ninety days worth the wait. For example, the disability insurance policy with a ninety-day elimination period where the premium may be several thousand dollars a year might only show a reduction of $100 a year or so with a one hundred eighty-day elimination period.

Nevertheless, sometimes six-month, one year or even two year elimination periods may be used to coordinate with short-term disability insurance policies offering benefits for six months, one year or two years. While the ninety-day elimination period is the most commonly issued elimination period for disability income insurance policies, consideration should be given to any short-term disability insurance programs an individual has and other factors as well.

Different disability insurance policies do not always count the number of days an individual has been disabled the same way in order to meet the elimination period. Some policies might require that the number of days of disability be consecutive. If a given disability insurance policy requires consecutive days to satisfy the elimination period and the insured goes back to work within that time even for a day and then goes back out again on disability, he or she will likely have to begin a new elimination period. A major shortcoming of this type of elimination period is that it creates an incentive to avoid attempting to go back to work. A better design is to not require the days to be consecutive. This approach typically utilizes what is known as a qualification period that will satisfy an elimination period as long as the insured is disabled and unable to work for a number of days within a certain period of time.

Designing a disability insurance policy suitable for a given individual requires careful consideration be given to the choice of elimination period. Thirty and sixty-day elimination periods may require premiums that are unacceptable to most clients, and may indeed be poor values. The decision of a ninety day elimination period versus a one hundred eighty day elimination periods is a far more common one. In those states that offer short-term disability insurance programs of six months, nine months, or one year, coordinating the elimination period with those plans might be feasible. However, one should be cautious here because the definitions of disability used by a given state's disability insurance program might be far more restrictive than that used in a personal policy. A good disability income insurance policy could potentially provide benefits where a state short term disability insurance program might not. In this case, the insured could have a long wait before collecting benefits from a policy where the elimination period is coordinated with a state disability insurance program.

It should be noted that a disability insurance benefit will ordinarily be paid thirty days after the elimination period has been satisfied. In other words, the insured will not receive the benefit on the 91st day of disability when the disability insurance policy he or she owns has a ninety-day elimination period.

The benefit period defines the amount of time individual may receive a benefit for disability. Disability insurance policies typically offer benefits for one year, two years, five or ten years, to age 65, and as a graded lifetime benefit. Individuals must realize that for policies with benefit periods other than age 65 and lifetime, the benefit period is normally over the entire duration of the contract. In other words, a disability insurance policy with a five-year benefit period will ordinarily offer benefits for a total of 60 months for each non-recurrent disability. For example, if an individual becomes disabled and collects benefits for 3 1/2 years (before that individual recovers) from a disability insurance policy with a five-year benefit period, and becomes disabled again from the same cause within 6 to 12 months (see specific policy language), the disability insurance policy will only have 1 1/2 years of benefits remaining. Generally, if a recurrent period of disability arises from a different cause it is considered to be a separate and unrelated period of disability and a new five year benefit period will apply.

Of course, there is a direct relationship between the size of the premium and the size of the benefit period. Because no one can predict the duration of a potential disability, generally the best benefit period is always the longest one available. As a practical matter, the longest one available might not be affordable. The cost of an individual disability policy can be justified by the potentially large loss of income that could result from a long-term disability. Even a small disability insurance policy is better than no disability insurance policy at all when it comes to meeting financial obligations while disabled.