What is the 'waiting period' in health insurance?

The 'waiting period' in health insurance refers to the specific duration that must pass before a policyholder is eligible for coverage of certain benefits. This period is instituted to prevent adverse selection, where individuals might seek coverage only when they anticipate needing medical care. It effectively ensures that all participants contribute to the risk pool before claiming benefits.

For instance, many health insurance plans may have waiting periods for pre-existing conditions, maternity coverage, or specific treatments. This means that after purchasing the policy, the insured must wait a predetermined amount of time before they can access those benefits, promoting fairness and sustainability in the insurance system. Understanding the waiting period is crucial for policyholders as it impacts their decision when choosing a plan and their financial preparedness for healthcare needs.