Deferred Period

The deferred period stated in an insurance policy refers to a period of time that has to pass upon diagnosis before a payout begins.

This basically means that an insured person has to be sick or disabled for at least a certain amount of time in order to be eligible for claims.

The deferred period usually falls between 3 to 12 months, or 30 to 365 days. And most often found as a clause in disability insurance.

A reason for this deferment is that these insurance policies are originally meant to provide cover for long term disability. And that one cannot be sure whether a disability is temporary or permanent after some time.

A deferred period allows an insurer more time to evaluate whether a payout is absolutely necessary as the condition of a patient become clearer.

The prospects of recovery would also be much clearer.

And in many cases, people recover from disability and are fit to resume their work during the deferred period before any payouts occur.

In cases where victims have received benefits after a deferred period, recovers, and suffers a recurrence of the disability, insurers can sometimes waive the deferred period on the second occurrence.

It’s understandable that most people would desire as low a deferred period as possible so that income payouts can be received soon after injury.

But premiums generally increase as the deferred period decreases. This also implies that the cheapest plans would have the longest deferred periods.

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