Question

When compared to the premiums for major medical expense coverage policies, the premiums for dread disease policies are typically

A) lower
B) identical
C) higher
D) about the same

Answer 1

Premiums for dread disease policies are typically lower than those for major medical expense coverage because dread disease policies cover fewer conditions.

Step-by-step explanation:

When compared to the premiums for major medical expense coverage policies, the premiums for dread disease policies are typically lower. This is because dread disease policies are limited in scope and only cover specific serious illnesses, such as cancer or heart disease, which statistically have a lower probability of occurrence compared to the range of medical issues covered under major medical policies. Moreover, major medical policies are designed to cover a wider array of health issues, which increases the risk to the insurer and, subsequently, the premium for the insured.