What effect does choosing a longer 'elimination period' have on a disability income insurance policy?

Question: What effect does choosing a longer 'elimination period' have on a disability income insurance policy?

Answer options:

• It increases the monthly benefit amount. ✅ It decreases the premium cost of the policy.
• It eliminates the need for medical underwriting.
• It shortens the benefit period.

Correct answer: It decreases the premium cost of the policy.

Explanation: The 'elimination period' is essentially a waiting period, acting like a deductible in terms of time. A longer elimination period reduces the risk to the insurer and therefore lowers the premium for the insured.