Initial form questions like "tell us if you have ever been to hospital for anything serious?", you're thinking "I'm not sure if that time I dropped in to the GP 5 years ago with a headache counts as serious [same for other things that seem trivial over the years, just being sensible]".
You phone the insurer to check, they say "oh there's no need to put that down, it's not meant for trivial things, you'd have to write an essay in a small box if we meant literally anything conceivable; don't worry about it". You couldn't possibly hope to remember every tiny thing over the years anyway, unless you had access to your various written medical records held by various parties.
10 years of premium payments later you make a claim because you now have MS, you need support and treatment, a brain scan confirms physical issues, and..... "your policy is invalid because you didn't tell us about that time you went in about a headache 15 years ago". They still keep the 10 years of premiums though.
You take them to court. Your lawyer mentions that this is extremely common practice by health insurance companies. They don't provide you with any way to confirm if your policy is valid until you make a claim, then it's too late. You did what you thought you were supposed to do. The lawyer says most people who then take the insurer to court are unable to prove they were misled, and the insurer keeps the premiums you paid despite not providing any actual insurance.
Don't ask me how I know.
I am disappointed the American people is simply putting up with this healthcare situation. I don't think it matters if your doctors welcome room is fancy. Or they have 10 administrators replying to you within minutes. In the end you want to be treated fast and efficiently, and it fails. But I digress.
I can see why paypal does this and I am glad we are planning on avoiding them in our back end.
In the U.S. I guarantee you that most insurance companies are NOT doing this. What this company is doing is called "Bad Faith" in insurance jargon. And the penalties for this sort of behavior are enormous, and can even include the possibility of the company losing its license to sell insurance in a particular state.
> The insurance industry as a whole is seriously messed up and congress seems unwilling to do anything about it.
Congress doesn't do much with insurance because insurance in the U.S. is regulated at the state level, not the federal level.
We may be talking past each other here. I was referring to property and casualty insurance in my comment, while it sounds like you're talking about health and disability insurance. Two completely different worlds and regulatory frameworks.
Now if you are in line for a large payout the insurance company will definitely review your application to see if you lied. Significant lies will get your policy cancelled and no payout. So don't lie on any insurance applications.