What could happen if an individual fails to disclose a pre-existing condition during underwriting?

Failing to disclose a pre-existing condition during the underwriting process can lead to significant consequences, such as the denial of coverage or the cancellation of the policy. Insurance companies rely heavily on the information provided during underwriting to assess risk and determine premium rates. When a pre-existing condition is not disclosed, the insurer may find itself covering medical expenses related to that condition without having accounted for the associated risk in the policy terms. This breach of trust can lead the insurer to deny claims associated with the undisclosed condition or to cancel the policy altogether, as the policy is considered void from the outset if key information was withheld.

The other options do not pertain to the appropriate implications of non-disclosure. For instance, automatic coverage for all medical expenses or requiring additional medical exams would not be reasonable responses to an individual's failure to disclose a known risk. Additionally, reducing premiums would directly contradict the risk evaluation process that underwriting serves, as undisclosed pre-existing conditions typically would lead to higher perceived risk, not lower costs.