Accident & Health Concepts✓ Verified · outline & fact-checked · Sep 2026Difficulty 2/5
Which statement correctly describes a limited (or limited-benefit) health insurance policy, such as a hospital indemnity policy?
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Answer & full 3-part explanation (select an option above, or peek)
Why A is correct
Limited policies — travel accident, specified disease, hospital income/confinement indemnity, accident-only, and credit disability — pay a stated benefit amount (for example, $150 per day hospitalized) rather than reimbursing actual expenses. The indemnity is fixed in the contract and does not vary with the size of the bill. This is why they are called limited: the benefit, not the actual loss, defines the payment.
Why the other options are wrong
- B) Reimbursing actual expenses up to a high limit is the hallmark of major medical coverage, not a limited policy.
- C) Some limited policies are accident-only, but others (such as specified disease and hospital indemnity) cover sickness as well.
- D) A high-deductible major medical policy still reimburses actual covered expenses after the deductible; a limited policy pays fixed benefits instead.
Memory hook
Limited = fixed check, whatever the bill says. Major medical = pays the bill. Know which one pays a flat amount.