Basic Policy Design Terms

Daily Benefit – The maximum daily (or monthly) amount that insurer will pay, once you have qualified for benefits.

Elimination Period – Like a deductible, this is the number of days that must pass between benefit eligibility and the start of benefits. Can be either defined in a policy by service day (a day on which you pay for covered services), or by calendar days (no requirement of paid services).

Inflation Provisions – Built-in inflation coverage is an optional benefit (rider) that is either selected (or not) when purchasing coverage. It increases the policy’s benefit automatically on the policy’s anniversary date, with not action required on the part of the insured, and no health questions. Other inflation provisions, such as options that can be exercised in the future, are sometimes available.

Benefit Period – When a claim is eligible for payment, the benefit period is the number of years that the policy will pay for covered services, if the full daily benefit were to be used each day. Policyholders, who use less than their full daily benefit may find that their policy’s benefit period is effectively extended. For example, most policies with a $300 daily benefit and a 2-year benefit period would pay out for 4 years in the event that only $150 in daily covered care costs were actually incurred.