Elimination Period

Elimination period is insurance industry terminology for what Australian consumers commonly call the waiting period. The term 'elimination' refers to the insurer eliminating or excluding the initial period of disability from benefit payments, thereby reducing claim costs and premiums. In Australian income protection insurance, elimination periods are typically structured as 14, 30, 60, 90, 180, or 720 days. The choice of elimination period is a key decision affecting both premium cost and practical coverage. Longer elimination periods assume you can self-fund during the initial disability period through sick leave, annual leave, or savings. From an insurer's perspective, elimination periods filter out short-term disabilities where people naturally return to work, reducing administrative costs and claim volumes. Many short-term illnesses resolve within 30-60 days, so longer elimination periods significantly reduce insurer risk and therefore premium costs. Australian regulators require clear explanation of elimination periods in the PDS, including whether the period must be served continuously (most common) or cumulatively. Some policies offer 'split' elimination periods where the first few days can be accumulated over multiple short absences. Understanding how your chosen elimination period works - whether it's calendar days or working days, whether it resets with each claim, and how it interacts with employer benefits - is essential for ensuring adequate income protection without coverage gaps.