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The Advice Centre

Understanding Pre-Existing Conditions

Wednesday, October 9, 2013
Insurance Basics, Understanding plan limits / exclusions

Understanding pre-existing conditions

A pre-existing condition is a health condition that you’ve had before your insurance coverage begins. This is one of the most misunderstood things about benefit coverage

Everyone wants to buy insurance when they’re already sick. In insurance, this is called “Adverse” selection.

Big word, right? All this means is that pre-existing conditions are likely to cost more in claims than the insurance company can fairly charge you for providing the coverage.

Imagine if anyone with a serious medical condition bought insurance. The coverage would be so expensive that nobody could afford it.

Pre-existing conditions typically apply to individual health plans and to travel coverage. Coverage through an employer is less likely to have exclusions based on a pre-existing condition, although it is possible.

Many of us have some kind of pre-existing condition, like asthma, or diabetes, where the condition is manageable without any debilitating impact on our lives, but that doesn’t mean coverage isn’t available. There are a few ways an insurance company can provide coverage when you have a pre-existing condition.

One way is to provide a policy with a higher premium which may require medical tests before you’re approved for coverage.

There are policies that guarantee coverage without a medical test, but these can cost more and have a capped dollar amount on how much coverage is provided.

Another way is a stability period. This is generally a period of time after treatment for a condition where you no longer show symptoms (or any new ones)… or your symptoms have not increased and seem stable.

These periods can vary depending on your age or the company providing you’re coverage so you’ll want to ask about this to be sure you understand how it works and what limitations there are.

The best way to protect yourself from the unexpected is to understand the policy you’re buying by asking your insurance company or advisor questions.

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