Waiting periods act like a policy excess and mean that benefits are not payable for events that only last a short period of time. By accepting a longer waiting period the risk reduces to the insurer and so the premium can be reduced.
Waiting periods are not all calculated in the same way. The main three types are,
- Excess,
- Franchise,
- Modified franchise.
Two important factors involved.
- How long the mortgage customer needs to be unable to work or be out of work in order to submit a claim.
- When the benefits are paid once the waiting period has passed and the claim is allowable.
Policies vary on how waiting periods are mixed.