What is a waiting period in an insurance policy?

A waiting period in an insurance policy refers to a specified duration during which no benefits are paid for claims after the policy begins. This period is typically set by the insurance provider as a way to manage risk and prevent claims that occur very shortly after a policy is initiated. By establishing a waiting period, insurers can help ensure that policyholders are not incentivized to submit claims right at the start of coverage, which can lead to higher costs for the insurer and, by extension, higher premiums for all policyholders.

For example, in health insurance or disability insurance, a waiting period might be implemented to allow time for the risk to stabilize after the policyholder has received coverage. Therefore, if an insured event occurs during this waiting period, the insurer will not provide any payout or benefit until the waiting period has elapsed. Understanding this aspect of insurance policies is pivotal for both the policyholder and the insurer to ensure expectations are clear regarding coverage and claims.