In general, what is true about the relationship between elimination period and premium?

The relationship between the elimination period and the premium is primarily based on the assessment of risk and the benefits provided by the insurance policy. When the elimination period—the time that must pass before benefits begin—is longer, the insurer is exposed to less risk because they will not payout for an extended period. As a result, the longer elimination period typically leads to a lower premium. This is because the insurer is saving money by delaying the amount of time they may need to pay out benefits.

In contrast, a shorter elimination period signifies that the insurance company may need to begin making benefit payments sooner, which increases their potential financial liability. Thus, as the waiting period diminishes in length, premiums generally increase to cover the added risk.

Understanding this relationship helps policyholders make informed decisions regarding their coverage based on their financial needs and potential risks, effectively managing the balance between premium costs and benefit accessibility. The other choices do not accurately reflect this fundamental principle related to elimination periods and premium costs.