General Insurance✓ Verified · outline & fact-checked · Sep 2026Difficulty 3/5
An individual health policy imposes a waiting period before coverage applies to preexisting conditions. This provision chiefly serves to:
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Answer & full 3-part explanation (select an option above, or peek)
Why B is correct
A preexisting-condition waiting period delays benefits for conditions that existed before the policy took effect. It is a classic defense against adverse selection: a person who suspects or knows that he is ill is less likely to buy a policy that will not pay for that illness immediately. By aligning the incentive to buy with genuine risk protection, the waiting period helps keep the risk pool balanced and premiums affordable for everyone.
Why the other options are wrong
- A) The waiting period actually delays payment for preexisting conditions; it does not guarantee immediate payment.
- C) Limiting paperwork is not the purpose; the provision is designed to control risk selection.
- D) The waiting period supplements, rather than replaces, the medical questionnaire and underwriting.
Memory hook
Waiting periods punish the crowd that buys now because it is already sick.