Waiting Period vs Benefit Period: What’s the Difference?

When taking out certain types of insurance products, such as Income Protection Insurance, you may be asked to choose the Waiting Period and the Benefit Period. Both of these will have implications to you at claim time.

So what exactly are these two terms?

The Waiting Period

The Waiting Period is an agreed amount of time after you suffer from a disabling sickness or injury– usually between two weeks and two years – before you become eligible to make a claim.

If you recover during this time, you will not be eligible to receive any payments. 

If, however, you are still unable to work at the end of the Waiting Period, then you will qualify for your payments and we will make your first payment one month after the aiting period ends. For example, let’s say you chose a 4 week Waiting Period. If you were injured and stopped work on 1st of April, your Waiting Period would start on 1st of April and end 28 days later on 28th of April. You would then qualify for your payments from the 29th of April. And your first payment would be paid one month later, on the 28th of May.

Usually, you have a range of options to choose from when it comes to selecting a Waiting Period. 

For example, TAL's Lifetime Protection Income Protection insurance policies allow you to choose from a 2-week, 4-week, 13-week or 2-year Waiting Period. 

Something to keep in mind is that, generally speaking, the longer the waiting period you select, the lower your premiums will be.

The Benefit Period

The Benefit Period describes the maximum amount of time for which you could receive benefit payouts as part of your insurance policy. 

For example, if you had a policy that included a 2-week Waiting Period and a 2-year Benefit Period, your Waiting Period would begin when you became unable to work due to sickness or injury. You would receive no payout for the first 2 weeks you are unable to work. Once the two weeks has passed your benefits will begin to accrue for each day you continue to be unable to work due to sickness or injury beyond the end of your Waiting Period, and are then paid to you monthly in arrears. While you remain unable to work, you can expect to continue receiving monthly payments according to your coverage until either the Benefit Period ends or you recover; whichever comes first (up to 2 years in this case).

TAL's Lifetime Protection Income Protection insurance allows you to select from a 1-year, 2-year or 5-year benefit period. 

Generally, the shorter the benefit period you select, the lower your premiums will be.

Conclusion

When setting up an Income Protection insurance policy that includes a Waiting Period and a Benefit Period, it is important to understand the role each will play in how your policy will function, not to mention the effect that the length of both periods can have on your insurance premiums. 

Generally, if the Benefit Period is shorter and the Waiting Period is longer, your premiums will be lower. Premiums are higher for longer Benefit Periods and shorter Waiting Periods. You need to assess what is best for your individual needs, objectives or financial situation.