Which of the following is NOT a limited benefit plan?

• A. Hospital indemnity policy
• B. Critical illness policy
• C. Long-term care insurance policy
• D. Life insurance policy

Answer: (D)

Limited benefit plans cover only specific risks or services and pay benefits for those narrowly defined events. A hospital indemnity policy pays a fixed daily amount for hospital confinement, which is a limited, specified benefit. A critical illness policy pays a lump sum upon diagnosis of certain serious illnesses, another defined event with a set benefit. A long-term care policy provides benefits specifically for qualifying long-term care services. Life insurance, on the other hand, isn’t tied to a particular health care event or service; it provides a death benefit (and sometimes cash value or living benefits) and is not a restricted, limited-benefit plan. So the option that is not a limited benefit plan is the life insurance policy.