Final answer:
The exclusionary clause in an accident and health policy addresses pre-existing conditions, dictating policy terms for these conditions. Charging an actuarially fair premium to a group as a whole can lead to financial imbalance if not carefully managed.
Step-by-step explanation:
The provision in an accident and health policy that addresses pre-existing conditions is the exclusionary clause. This specific clause defines how the policy handles health issues that the insured had prior to the policy's effective date. Typically, these pre-existing conditions may either be excluded from coverage for a certain period or covered under certain restrictions, depending on the policy's terms.
Charging an actuarially fair premium means that the insurance company attempts to set premiums based on the true level of risk presented by each insured individual or group. If the insurance company charges this fair premium to the group as a whole instead of to each group separately, it might risk a financial imbalance, as high-risk individuals would end up being subsidized by those with lower risk, which could lead to a scenario where lower risk individuals choose to opt out, further unbalancing the risk pool.