Insurers don't just give out policies to anyone who applies for them. Their business is all about risk. They know that some people will have to make claims but their aim is to make money by primarily selling to those that won't. For some consumers, such as those with pre-existing conditions, this results in increased premium costs, inadequate coverage and, in some cases, a refusal to issue a policy in the first place. How does this work and what can you do to get the benefits you need?
Insurance Policies and Pre-Existing Conditions
Companies working in certain insurance sectors, such as life, travel and health, pay particular attention to pre-existing medical conditions when they vet applicants. This simply helps them to assess the likelihood, or risk, of a consumer having to make a claim on their policy.
So, if you have had some kind of medical condition in the past, then you pose an increased risk. The assumption is that you will be prone to suffer from related or similar problems again in the future. An insurance provider may simply not be willing to pay for that risk and may impose conditions or higher charges if you apply for standard policies.
The Costs of Pre-Existing Medical Insurance Risk
For standard policies people with existing conditions may find that an insurance provider won't accept them at all. In some cases, you can take out a policy but may find your condition listed as an exclusion that won't be covered. Some regular providers will agree to full coverage but will charge a much higher rate. It may simply be quicker and more cost effective to look for policies that are actually designed to help.
Finding Coverage for Previous Conditions and Illnesses
Some insurers sell specialist plans to people with a previous medical history and you may find it less stressful and easier to take this route. One downside here may be cost. These products may sometimes be cheaper than standard policies with weighted risk charges, but often cost more than regular coverage. Only you can decide if the peace of mind of having full insurance outweighs this disadvantage.
How to Source Low Cost Pre-Existing Policies
Not all policies here will charge the same premiums and consumers may be wise to shop around to compare quotes. Online insurance supermarkets may be a good place to start. These sites bring together many different products to make it easier to find providers in this sector and to compare costs. If you really don't want to got through the standard physical exam process, you could also look at guaranteed/no exam policies as an alternative.
Finally, bear in mind that honesty really is the only policy here. If you have a pre-existing medical condition but don't disclose it to your provider, then your coverage could be invalidated. So, you could make all your premium payments but, when it comes to making a claim and the company finds that you lied, then they may simply not pay out at all.
It may also be worth talking to any insurer about your own medical conditions before making an application. If you don't check this out and get turned down for a policy then this might affect you in the future. Providers often ask applicants if they have been rejected for coverage in the past and, if this is the case, it may influence their decision.
Carol Finch - Carol Finch is the Topic Editor for Retirement Planning, Budgeting, E-Commerce & Technical/Business Writing on Suite101.
Join the Conversation