New Jersey Life and Health State Practice Exam

What does the elimination period under a hospital indemnity plan refer to?

1. The frequency of hospital visits

2. The maximum benefit period

3. The specified number of days an insured must wait before receiving benefits

4. The type of services covered

The correct answer is: The specified number of days an insured must wait before receiving benefits

The elimination period under a hospital indemnity plan refers to the specified number of days an insured must wait before receiving benefits. This period acts as a deductible in terms of time and is designed to ensure that the insured has a certain level of out-of-pocket expenditure before the insurance coverage kicks in. During the elimination period, the policyholder typically must bear the cost of hospital services themselves. Understanding the elimination period is crucial for policyholders because it influences when they can expect their benefits to begin and affects their financial planning in the event of hospitalization. The other options do not accurately describe the purpose of the elimination period, focusing instead on aspects like the frequency of hospital visits, the maximum benefit period, or the types of services covered, none of which directly relate to the waiting time before benefits are paid.