Illinois Health Insurance Practice Exam

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What was the original purpose of establishing Private Health Insurance Companies?

  1. A. To provide free healthcare services

  2. B. To regulate government insurance programs

  3. C. To issue risk indemnity policies

  4. D. To facilitate tax audits for insurance policies

The correct answer is: C. To issue risk indemnity policies

The original purpose of establishing Private Health Insurance Companies was to issue risk indemnity policies. These companies were created to offer financial protection against the risk of incurring medical expenses, ensuring that individuals could have coverage for healthcare services in exchange for premium payments. This function distinguishes private health insurance companies from other options like providing free healthcare services, regulating government insurance programs, or facilitating tax audits for insurance policies.

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