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Dread disease policies: are they ghoulish?

  • November 15, 2011

Q: Dread disease policies: are they ghoulish?

A: No, they’re not ghoulish. But they may be superfluous. Individual and group health insurance usually covers all diseases, including dread diseases.

Specified disease policies, sometimes called “dread disease polices,” pay benefits – usually in a lump sum – only when you’re diagnosed with a specific illness, such as cancer, heart disease or stroke. Typically, designed to supplement an existing health policy, they’re often sold as a rider, rather than a stand-alone policy

According to, one state has banned their sale and other state insurance regulators have posted advisories cautioning people about these policies, which generally aren’t guaranteed renewable.

“Most insurance experts recommend buying a good comprehensive policy instead,”according to “Dread disease policies tend to be a poor value, and some sellers try to mislead people and prey on their fears about cancer and other diseases.”

Review your health insurance policy in detail. Then, if you think you’ll still have significant costs under your primary coverage, only then consider specified disease insurance or a rider to your current policy. But ask around and do your research.