Ace the California Accident and Sickness Exam 2025 – Boost Your Confidence and Cover Your Future!

Question: 1 / 400

In health insurance, the result of rising morbidity rates is?

Decreased premiums

Increased premiums

In health insurance, rising morbidity rates indicate an increase in the incidence of illness and health-related issues among the insured population. As more policyholders utilize medical services and file claims due to higher rates of sickness, insurance companies face higher costs related to these claims. To maintain financial stability and cover these increased costs, insurers typically raise premiums.

This increment in premiums is essential for the insurer to ensure they have adequate funds to pay for the medical care of their policyholders while still making a profit. Thus, when morbidity rates rise, it directly leads to increased premiums as a preventative measure for the insurer against potential losses. This is a fundamental principle in the risk management and underwriting processes within the health insurance industry.

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Stable premiums

Fluctuating premiums

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