What is the purpose of medical underwriting in health insurance?

Medical underwriting serves a crucial function in health insurance by evaluating an individual's health history and associated risks before offering coverage. This process involves assessing various factors, including pre-existing conditions, lifestyle choices, and medical history, which helps insurers determine the likelihood of future claims and the overall risk posed by the individual.

By understanding a person's health background, insurers can make informed decisions about whether to issue a policy and under what terms. This includes setting appropriate premium rates that reflect the level of risk posed by the insured, thus ensuring the insurer can maintain profitability while providing necessary coverage.

The process is essential for maintaining the balance in the insurance pool, wherein healthier individuals can help offset the costs of covering those with higher health risks. Through medical underwriting, insurers aim to create a fair and sustainable framework for all policyholders.