In health insurance, what does a "waiting period" signify?

A "waiting period" in health insurance signifies the time before coverage for certain conditions begins. This is a key aspect of many health insurance policies designed to manage risk and prevent adverse selection. During this waiting period, the insured may not be eligible to receive benefits for specific conditions or treatments outlined in the policy.

Understanding this concept is crucial because it affects when a policyholder can access benefits for particular healthcare needs. For instance, a health insurance policy may have a waiting period for pre-existing conditions, meaning that if a person has an existing health issue at the time they purchase insurance, they would not be able to claim benefits related to that condition for a specified period.

This aspect of health insurance not only helps insurers mitigate risk by ensuring that policyholders do not immediately seek coverage for known issues but also encourages individuals to maintain continuous coverage, which can lead to better overall health outcomes.