13.3.3 Preexisting Conditions
Most everyone is familiar with the term preexisting conditions. It was defined earlier in Lesson 11 as:
"Any disease or sickness that was diagnosed by a physician within a stated period prior to health insurance taking effect, including symptoms that a physician could have diagnosed and for which a prudent person would have sought treatment."
How the contract is written and what exclusions are included in the contract will determine the company's stand on preexisting conditions. In terms of medical expense coverage, this clause pertains to any type of physical ailment that occurred before coverage was extended and that was not listed on the application. If the condition was listed on the application, the insured can opt to provide extra coverage in the form of a waiver or rider. If the condition was not listed on the application, the incontestable provision comes into play. The insurer has a designated amount of time in which to correct the situation (typically two years); after which time, the preexisting condition must be treated as if it were a new condition.
Preexisting condition clauses protect insurers from adverse selection.
