Why do insurance companies impose pre-existing condition clauses?
Insurance companies, like any other business, need to maintain a balance between revenue sources (for example, premiums and investment income) and operating and claim expenses. Pre-existing condition clauses help provide this safeguard by preventing individuals from purchasing insurance only when a medical service is required. Without such a safeguard, it’s possible that the company’s claim expense may far exceed its revenues and put it out of business.
