What is the purpose of a waiting period in health insurance?

The purpose of a waiting period in health insurance is to prevent claims for certain conditions for a set time. This means that after a policy is initiated, there is a specified duration during which claims for specific illnesses or conditions cannot be made. The rationale behind this is to discourage individuals from purchasing insurance only when they expect to incur high medical costs, which can lead to higher premiums and losses for the insurer. By implementing waiting periods, insurance companies manage their risk and help ensure that coverage remains affordable for all policyholders.

In terms of the other choices, encouraging preventive care generally involves health promotion and wellness initiatives rather than a waiting period. Limiting costs for the insurer can be an indirect effect of various underwriting practices but is not the direct purpose of a waiting period. Although waiting periods might lead to more comprehensive coverage options in some cases, their primary function directly relates to managing claims and pre-existing conditions rather than broadening the scope of coverage.