A specified disease policy that covers only cancer would pay benefits when:
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Answer & full 3-part explanation (select an option above, or peek)
Why A is correct
A specified disease policy, often marketed as a cancer policy, pays only for the disease named in the contract. Coverage triggers on diagnosis of the specified condition, subject to the policy's waiting or probationary period, and benefits are paid either as reimbursement for related treatment or as stated fixed amounts. Because only one disease class is covered, the policy is a limited-benefit product: premiums are low, but the protection gap is large. The policy does not respond to other illnesses, general disability, or death from unrelated causes. Specified disease is one of the limited policies identified in the general concepts of medical and disability insurance (AH-II.3), and examiners test the narrow scope of the benefit trigger.
Why the other options are wrong
- B) Coverage under a specified disease policy is confined to the disease named in the contract. Medical expenses incurred for any other condition, illness, or injury are not paid, so the policy would not respond merely because the insured incurred a medical expense for an unrelated diagnosis.
- C) Disability income protection, not specified disease coverage, responds when the insured becomes disabled from any cause. A cancer-specific policy pays only when the named disease is diagnosed; it does not pay for disability arising from other illnesses.
- D) Death benefits belong to life insurance or accidental death coverage, not to a specified disease policy. The cancer policy is not triggered by the insured's death from an unrelated cause, and its benefit is tied to diagnosis of the named disease.
Memory hook
Specified disease = one named disease only; cancer pays, a heart attack does not.