Arizona Health Insurance Practice Exam

What is an effect of limiting the duration of coverage in a dental insurance plan?

1. Increased premiums

2. Enhanced consumer choice

3. Discouragement of high-risk individuals

4. Higher coverage limits

The correct answer is: Discouragement of high-risk individuals

Limiting the duration of coverage in a dental insurance plan leads to the discouragement of high-risk individuals. When coverage is provided for only a certain period, high-risk individuals, such as those with pre-existing dental issues or higher likelihood of requiring extensive dental treatment, may find that their ongoing needs will not be adequately met once the coverage lapses. As a result, they are more likely to avoid purchasing such plans, as they are less favorable to their situation. This dynamic can lead insurers to attract a healthier pool of members who do not anticipate needing extensive or prolonged dental care, thus managing their costs and risks more effectively. The other options do not align with the outcomes of limited duration coverage. For instance, increased premiums would not necessarily result from limiting coverage duration but could be a strategy used to manage risk or attract customers under different circumstances. Enhanced consumer choice is unlikely because shorter coverage periods could limit options for individuals needing long-term care. Higher coverage limits tend to focus on the amount of benefit available rather than the duration of service, which is a separate consideration.