Which policy type offers higher limits and is intended to cover catastrophic costs?

• A. Basic medical expense policy
• B. Dental policy
• C. Vision policy
• D. Major medical policy

Answer: (D)

This question tests understanding of how medical expense policies protect against very high medical bills. A major medical policy is designed to provide high benefit limits and broad coverage for hospitalizations, surgeries, physician services, and other substantial medical expenses. It usually includes a deductible, coinsurance, and an annual out-of-pocket maximum, which helps cap total costs for the insured.

In contrast, a basic medical expense policy offers limited coverage with lower limits, aiming at essential, routine care rather than catastrophic costs. Dental and vision policies focus on specific areas of care and typically have their own separate limits, not intended to protect against large medical bills.

So, the policy type that offers higher limits and is intended to cover catastrophic costs is the major medical policy.