Certified Financial Consultant (CFC) Practice Exam

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What is the main purpose of a Dread Disease Policy?

To cover general health care expenses
To provide coverage for specific catastrophic illnesses
To pay out only upon death
To insure against job loss

The correct answer is: To provide coverage for specific catastrophic illnesses

The main purpose of a Dread Disease Policy is to provide coverage for specific catastrophic illnesses. These policies are designed to offer financial support to policyholders who are diagnosed with severe and often life-threatening diseases, such as cancer, heart attack, or stroke. The intent is to alleviate the financial burden associated with the high costs of treatment, ongoing medical care, and the potential loss of income during recovery. Unlike standard health insurance, which typically covers a broad range of healthcare expenses, a Dread Disease Policy focuses on selected diseases acknowledged as particularly serious. This specialized coverage ensures that individuals can access the necessary treatments without facing overwhelming healthcare costs that may arise from such significant health crises. As a result, the policy acts as a safeguard, providing peace of mind and necessary financial resources during difficult times.