What is the main function of a moratorium in PMI policies?

The main function of a moratorium in Private Medical Insurance (PMI) policies is to avoid successful claims on pre-existing conditions. A moratorium period is implemented at the start of an insurance policy, during which the insurer will not cover treatment for any medical conditions that the policyholder had prior to the start of the policy. This means that if a policyholder has a condition that exists before the moratorium period begins, they cannot make a claim for treatment related to that condition until the moratorium expires, which is typically set for a specific duration (often a couple of years).

This strategy helps insurers manage risk by excluding certain high-risk claims from early policyholders and controls potential costs associated with covering pre-existing conditions. As a result, after the moratorium period, if the policyholder has not received treatment for that condition during the moratorium, they may then be eligible for coverage related to it, depending on the specific terms of the policy.

This option distinguishes itself by focusing on managing risk related to pre-existing health issues, which is a foundational aspect of PMI policy design, hence reinforcing the importance of understanding moratoriums in health insurance contexts.