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What is a probationary period?

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In the world of insurance, there are two periods of time that could be considered waiting times: probationary periods and elimination periods. These two are often confused because they are similar but not the same thing.

Learn what a probationary period is and what differences it has.

What is a probationary period and how does it work?

A probationary period is the period of time after you apply for a policy but before you can make a claim. Some auto and homeowners insurance policies feature these, but they are most often seen with disability insurance. Probationary periods can also apply to certain types of coverage in a policy but not everything.

The lag in time allows insurers to be sure your application is truthful. If they detect any issues of fraud — such as you claiming that an injury happened after getting the policy when it occurred beforehand — they will turn down your application. The length of this period varies. It may be 15 days or longer, depending on the circumstances of your application.

While the probationary period is in effect, even if your application has been approved, you cannot file a claim with the company. Once you have been notified that the probationary period is over, you may file a claim on your policy.

With auto and homeowners insurance, the probationary period is the same thing, but is usually much shorter or even non-existent. In some cases, your policy may go into effect as soon as you pay the initial premium, and you can make a claim the next day if needed. The only way to know for sure, though, is to check your policy documents.

Probationary period vs. waiting period

The waiting period, or elimination period insurance, is slightly different from the probationary period. The elimination period is the time between when you file a claim and when the benefits kick in. It is not related to the beginning of the policy, as the probationary period insurance is. An elimination period happens whenever you file a claim.

The elimination period is frequently a few months. So, for example, if you make a claim on your long-term disability insurance because you have cancer, you have to wait for that amount of time to pass before you receive any benefits — and it may even be longer depending on the company’s billing cycle.

For disability insurance, where it’s most common to see these terms used, there may or may not be a probationary period, but there will be an elimination period. You may be able to choose how long this period lasts when you sign up for your policy.

What’s worth noting is the fact that if you opt for a longer waiting period, your premiums will be lower because the company will hold off on paying out a claim for a longer period of time. A shorter elimination period will result in a higher premium.

To keep your premiums low, it’s worth your while if you can to stash away a nest egg that could keep you going for several months in the case of a disability so you can opt for a longer elimination period with your policy. 

What to know about waiting periods

The waiting period between when you fill out an application and when you begin to receive coverage varies among the different kinds of insurance. To know about your policy, ask your agent or read your policy documents carefully. They should list your start date and any waiting periods. 

Here are some general details about whether you can expect a waiting period or not:

  • Homeowners: With homeowners insurance, you can choose a date for coverage to begin if you’re moving into the house on a certain date. There is usually a gap of a month to a few months before you can make a claim on your policy to avoid fraud.
  • Auto: There isn’t much of a waiting period usually for auto insurance coverage to begin. Once you fill out your application, you may receive an answer on that same day. Once your first premium is paid, which may be possible to do online, your coverage begins and you can get on the road. However, certain specialized types of coverage within your policy might have a waiting period.
  • Short-term disability: Short-term disability may have a probationary waiting period, but it’s generally shorter than for long-term disability. Elimination periods vary. You may wait a week after making a claim for benefits to start or it may be longer. This period is determined by the insurer and, if you’re getting your policy through your work, your employer.
  • Long-term disability: Long-term disability doesn’t generally have a probationary period. It does, however, have an elimination period. This is the period after your disability occurs and you make a claim, but before your coverage begins. 

Different insurance companies will have different policies. Check with an agent or your documents for specific information.

The takeaway

The probationary period is any time between when you fill in your application and you’re able to make a claim on your policy. The elimination period, seen most often in long-term disability policies, is the insurance waiting period between when you make your claim and when your first check is issued.

  • Probationary periods happen at the beginning of your policy; elimination periods occur after a claim is made.
  • They’re most common in disability insurance but may occur also in auto and homeowners insurance.
  • Both types of waiting impact your ability to make a claim.

Probationary periods and elimination periods are times when you need to wait for your insurance to be activated and you are able to make claims on the policy. They’re not the same thing. A probationary period occurs at the beginning of the policy’s life and reflects how quickly you can make a claim after you’ve completed the application and started paying premiums. 

The elimination period, meanwhile, refers to the time between your claim, at any time during the life of the policy and the arrival of your first check. A longer elimination period generally means you’ll pay less on your premiums because your insurer doesn’t have to support you for as long as it would if your elimination period is short.

Mary Van Keuren

After 30 years as a writer and editor in academia, Mary now writes full-time for the insurance and finance industries. Her work has appeared on Reviews.com, TheSimpleDollar.com and Bankrate.com, as well as other consumer-focused websites.

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