Definition of Catastrophic Insurance Benefits

Catastrophic health insurance may save money.

Catastrophic insurance is a type of health insurance that may save healthy people money. With its lower premiums, catastrophic or high-deductible policies cover emergencies or other serious illnesses which cost thousands of dollars. Catastrophic illness insurance is often known as major medical insurance and covers conditions such as long-term hospitalization, cancer and heart attack.

How It Works

People may choose a high deductible policy because they rarely visit a doctor but want insurance in place if a catastrophic illness, such as cancer, strikes. In return for lower monthly premiums, they will pay most medical expenses until the deductible and out-of-pocket limits are met, according to Insurance.com.

Typical Policyholder

A catastrophic policy works best for someone in his 20s who rarely seeks medical treatment or someone in her 50s who is in good health with resources to pay medical bills until the deductible is met, says einsurequote.com.

Exclusions

Catastrophic policies do not cover people who have pre-existing conditions such as AIDS or diabetes.

Is Catastrophic Insurance Right for You?

If you visit the doctor a lot, you may want a traditional policy with a lower deductible instead.

Other Options

Employer-provided health insurance may contain catastrophic insurance benefits; check the policy.

References

• Insurance.com: Pros and Cons of Catastrophic Health Insurance
• einsurequotes.com: Catastrophic Health Insurance:
• Investopedia,com: Catastrophic Illness Insurance

Resources

• Financial Web: What is Catastrophic Health Insurance?