What is the purpose of a "waiting period" in a disability insurance policy?

The purpose of a "waiting period" in a disability insurance policy is to delay the payment of benefits for a specified time. This waiting period, often referred to as an elimination period, helps insurers manage their risk and reduce the frequency of small claims. Essentially, it means that if a policyholder becomes disabled, they must wait a predetermined amount of time before they can receive their benefits. This serves multiple purposes: it encourages individuals to take measures that may prevent extended disability, helps maintain lower premium rates by limiting the total amount the insurer might pay out in benefits over time, and ensures that only genuine and serious claims are submitted. By understanding this concept, policyholders can make informed decisions about their coverage and plan accordingly for the financial impact of a disability.