What is considered by insurance companies to be a ‘pre-existing condition’?

Insurance companies use the term "preexisting condition" to refer to any medical situation which existed before the policy was purchased. This is usually in reference to a disease or medical condition such as diabetes or asthma, but it can be used in conjunction with anything that happened prior to the policy going into effect.

Hereditary conditions are preexisting medical conditions. People generally think of a disease when referring to preexisting conditions, but they could also include things such as a weak heart, being born without an appendage, or even having an amputation. For insurers, the term is used to indicate an increased risk for the insurance company. For example, Celiac disease is a preexisting condition, and even though it does not pose a significant risk by itself, it does indicate the potential for other conditions to appear later.

Preexisting conditions indicate potential risks for the insurance company. For example, missing a limb is not necessarily a problem in itself, but it does carry the potential for additional injury or infection. Risk is the key, and a preexisting condition that does not pose a risk will not increase the premiums you have to pay. Since insurance companies equate risk with increased expense, the rates charged for such conditions increase based on the amount of potential costs for the insurer.

Even though a common cold may exist before the policy goes into effect, the risk it poses is negligible for most people. Unless there are other considerations which could increase the danger or severity of the common cold, it will not count against a health insurance applicant in the way that, for example, heart disease or cancer would, because the cold could cause people with those conditions to have more severe reactions to any form of illness, even a common cold.