Why are 'waiting periods' typically included in life insurance policies?

Waiting periods are implemented in life insurance policies primarily to protect insurers from immediate claims following the purchase of a policy. This interval serves as a safeguard against potential abuse of the insurance system, where an individual might obtain coverage shortly before passing away or incurring a significant health issue. By ensuring that there is a designated waiting period, insurers can mitigate the risk of issuing policies that are immediately filed for claims, which could lead to financial losses.

The inclusion of waiting periods also maintains the integrity of the underwriting process. It allows insurers to evaluate the risk associated with each applicant more thoroughly, ensuring that they are pricing policies appropriately based on the overall health and lifestyle of the insured. This practice is essential for the sustainability of the life insurance model, as it helps maintain balanced premiums and protects against fraud or moral hazard.

While the other options touch upon reasons related to the policyholder’s experience, they do not accurately encapsulate the primary intention behind the waiting periods as a risk management tool for the insurer.