Benefit Period: Definition & Meaning
Dealing with insurance can be tricky. Whether that’s your healthcare insurance to provide you with long-term care, unemployment insurance to protect you in the case of long-term unemployment, or automobile insurance to make sure you can always fix your vehicle.
One thing you need to keep close attention to is the benefit period.
But what exactly is a benefit period? And why is it so important?
We’ll take a closer look at the definition and meaning of a benefit period in our handy guide.
Table of Contents
- A benefit period is the period of time in which an insurance policyholder may file and receive payment. This is for a covered event.
- The payment may also be filed and received by the insurance policy holder’s dependent.
- The longer the period of time the benefit period lasts, the greater risk the insurer is under.
What Is a Benefit Period?
A benefit period is the period of time in which an insurance policyholder may file and receive payment. This is for a covered event or valid claim. The payment may also be filed and received by the insurance policy holder dependent.
Any insurance plan that you can care to think of will have a benefit period included. This can vary based on what type of policy it is. It can also depend on the provider of the insurance and the policy premium.
The most well-known use of a benefit period is in relation to different types of health insurance. But it is also used with a number of other insurances such as disability and homeowners.
Insurance in healthcare can cover anything from the costs for inpatient hospital treatment to paying for skilled nursing facilities.
How Does a Benefit Period Work?
The longer the period of time the current base period lasts, the greater risk the insurer is under. This means that the length of a benefit period tends to affect the price of the premium.
As a benefit period nears its end, the insurer will let the policyholder know the cost to renew. In order for the coverage to be uninterrupted, the policyholder must make the payment before the benefit period expires.
Knowing the benefit period on your insurance is vital. If you aren’t aware of the expiry date, you can end up being unknowingly uncovered by your provider.
FAQs on Benefit Periods
What Is the Maximum Benefit Period?
The maximum benefit period will depend on your insurance provider and the type of insurance you have. Some will only offer short benefit periods as this reduces risk.
What Are the Benefit Period Costs?
The cost of a single benefit period will depend on how long your benefit period with your insurance companies is. The general rule of thumb is the longer the benefit period, the more expensive your coverage will be.
What Is the Elimination Period?
The elimination period is the amount of time when an injury or illness starts and when you receive your payments from the insurer.
What Is the Waiting Period?
The waiting period is similar to the elimination period. But the waiting period is the amount of time an insured person has to wait until their insurance comes into effect. No benefits will be received during this probationary period.
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