What type of policy would only provide coverage for specific types of illnesses (cancer, stroke, etc.)?

• A. Major Medical Insurance
• B. Hospital Indemnity Insurance
• C. Dread Disease Insurance
• D. Medical Savings Plan

Answer: (C)

This type of policy is designed to provide a lump-sum benefit only when a defined set of illnesses is diagnosed. Dread disease insurance covers specific illnesses such as cancer, stroke, or heart attack, according to a predefined list, rather than broad medical expenses. The payout can be used at the policyholder’s discretion to cover costs that aren’t tied to a particular treatment or to replace lost income during recovery. It does not reimburse general medical costs or hospital stays, and it won’t pay for every health issue.

In contrast, major medical insurance covers a wide range of medical services and expenses; hospital indemnity insurance pays a fixed amount per hospital stay; and a medical savings plan is a savings vehicle for future medical expenses, not a policy that pays only for listed diseases.