Why "Dread Disease" Policies Should Be Avoided

Stephen Barrett, M.D.

“Dread disease” policies cover treatment for cancer or other specified serious diseases. Although promoted as a way to supplement basic or major medical coverage, they are a very poor investment. Some of the benefits offered would duplicate existing coverage and thus are unnecessary. Other benefits typically are so narrowly defined that even if the dreaded illness occurs, the policy will cover only a small part of the cost. Moreover, the odds of developing a specific dread disease are small compared to the odds of becoming seriously ill from all causes added together. Therefore someone who wishes greater protection should purchase a high-limit comprehensive policy that covers all illnesses rather than one or a few. Some states have banned or restricted the sale of policies limited to specific diseases. Consumers Union would like all hospital indemnity and dread disease policies banned by federal law.

This article was posted on August 6, 2009.

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