Arizona Health Insurance Practice Exam

What effect may a pre-existing conditions exclusion have on insured benefits when replacing an individual health insurance policy?

1. Increase the insured benefits

2. May reduce the insured benefits

3. No effect on insured benefits

4. Cancels the insured benefits

The correct answer is: May reduce the insured benefits

A pre-existing condition exclusion can significantly impact the benefits an insured individual may receive when transitioning to a new individual health insurance policy. When a health insurer imposes a pre-existing conditions exclusion, it means they will not cover any medical issues or treatments related to conditions that existed before the start of the new policy. In practice, this results in limitations on the benefits available to the insured, particularly for ongoing treatments or management of these conditions. Consequently, when replacing an existing policy, the insured may find that important aspects of their healthcare coverage are reduced or limited because the new insurer may deny coverage for those pre-existing conditions during the exclusion period. This is particularly important for individuals who have chronic illnesses or conditions that require ongoing care, as they may need to juggle between the coverage provided by the old policy and the limitations set by the new insurer. Thus, in many cases, this exclusion effectively reduces the overall insured benefits during the relevant exclusion period, confirming why this particular choice regarding the impact of pre-existing conditions exclusions is accurate.