Florida Insurance Licensing Practice Exam

A health policy often has a provision which states a period of time between issuance and acceptance before sickness benefits begin. This eliminates people only buying health insurance when they find out that they are ill. This is called a/an:

1. Grace period

2. Pre-existing period

3. Elimination period

4. None of the above

The correct answer is: Elimination period

A health policy provision which states a period of time between issuance and acceptance before sickness benefits begin is known as an elimination period. This period of time exists to prevent people from only purchasing health insurance after they find out they are ill, which would be financially damaging for insurance providers. The grace period (choice A) typically refers to the period of time after the due date of an insurance premium where coverage will still be in effect without penalty. Pre-existing period (choice B) is related to a specific type of health insurance coverage, where a person's pre-existing conditions may not be immediately covered. Finally, the correct answer is not 'none of the above' (choice D) because option C was the correct answer.