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A prospective insured completes and signs an application for health insurance but intentionally conceals information about a pre-existing heart condition. What will the company likely do upon discovering the concealment during a claim?
Cancel the policy
Issue a claim penalty
Continue coverage but exclude the heart condition
Prosecute the insured for fraud
The correct answer is: Continue coverage but exclude the heart condition
Upon discovering the concealment during a claim, the company is likely to continue coverage but exclude the heart condition. This is because if they cancel the policy, it would leave the insured without any health insurance at all. Issuing a claim penalty would also not be the best option as it may not fully address the issue at hand. Prosecuting the insured for fraud may be a legal option, but it is not a desirable outcome for the company as it involves time and resources.