Kansas · Life, Accident & Health Sample Interactive Mind Map
Types of Limited Health Policies
A visual breakdown of Types of Limited Health Policies — one of the concepts you can count on seeing on the exam.
The TESTivity Interactive Mind Mapping Graphic we picked for the Kansas Life & Health sample is Types of Limited Health Policies — and this is a concept you can count on seeing on your pre-licensing exam. Get the structure straight once and those questions turn into free points.
So explore it. Click through, see how the pieces relate, and let the layout do some of the remembering for you.
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Limited health insurance comes in many flavors — start with the ones that pay you cash.
Accident-only, critical illness, and hospital indemnity all pay fixed or lump-sum benefits triggered by an event — not reimbursement of actual bills.
Accident-only, critical illness, and hospital indemnity all pay fixed or lump-sum benefits triggered by an event — not reimbursement of actual bills.
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Accident-Only Insurance
Accidents only — sickness excluded
- Covers losses from accidental bodily injury only — accidental death, disability, and medical expense
- Sickness and disease are entirely excluded — the most restrictive limited policy
- Requires the limited-benefit notice; leaves the insured fully exposed to illness
The trap they setAccident-only pays only for accidents. Marketed to budget buyers, it can create a false sense of security if they think it’s comprehensive coverage.
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Critical Illness (Dread Disease)
Lump-sum cash on diagnosis
- Pays a lump-sum cash benefit upon diagnosis of a specified serious illness (cancer, heart attack, stroke, organ failure…)
- Cash can be used for any purpose — medical bills, mortgage, living costs, travel for treatment
- Does not pay medical bills directly and is not a substitute for major medical
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Hospital Indemnity (Income)
Fixed dollars per day, no coordination
- Pays a fixed dollar amount per day of hospital confinement — regardless of actual charges
- Not coordinated with other insurance — the insured keeps the full benefit even if major medical also pays
- Common use: covering deductibles, copays, and lost income during hospitalization
Frequently testedHospital indemnity is a pure indemnity product — a scheduled cash payment, not reimbursement. Coordination of benefits does not reduce it; the insured collects both major medical AND the indemnity benefit.
Two limited policies stand out for HOW they’re structured, not just what they cover.
Credit disability pays the lender, not you. Blanket covers a whole group with no individual certificates.
Credit disability pays the lender, not you. Blanket covers a whole group with no individual certificates.
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Credit Disability Insurance
Benefit goes to the creditor
- Makes loan payments if the borrower becomes disabled — tied to a mortgage, auto, or personal loan
- Benefit paid directly to the lender (creditor) — not to the insured borrower
- Sold at loan origination; benefit equals the scheduled loan payment, limited to the loan term
Frequently testedCredit disability pays the LENDER, not the borrower — the opposite of standard disability income (which pays the insured). The benefit equals the loan payment, not a percentage of income.
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Blanket Insurance
A group, no individual certificates
- Covers a group with a common affiliation — students, sports teams, passengers, campers — under one policy
- No individual certificates issued (unlike traditional group insurance)
- Coverage adjusts automatically as members change — no individual underwriting
How they test thisBlanket = a defined group (e.g., school athletes) covered under a single master policy with no individual certificates; new members are automatically included.
Ancillary coverages fill in the everyday gaps: drugs, teeth, and eyes.
Prescription drug, dental, and vision coverage are often sold as supplements alongside medical insurance.
Prescription drug, dental, and vision coverage are often sold as supplements alongside medical insurance.
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Prescription Drug
Covers outpatient medications. Cost-sharing via copays, coinsurance, deductibles, and formulary tiers that set coverage levels by drug class.
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Vision Care
Routine eye exams, frames, lenses, and contacts. Usually a supplemental benefit with scheduled amounts per service.
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Dental Insurance — Tiered Coverage
Preventive high, major lower
100%
Diagnostic & Preventive
Exams, X-rays, cleanings — often 100%, no cost-sharing, to encourage prevention.
70–80%
Basic Restorative
Fillings, simple extractions — typically 70–80% after a deductible.
50%
Major Services & Orthodontics
Crowns, bridges, dentures, root canals, braces — typically 50%; ortho often has a separate lifetime max.
Exam Tip. Dental plans usually cap annual benefits at $1,000–$2,000 per person — low relative to actual dental costs. The tiered structure (preventive high, major low) is a classic test point.
Medigap fills the holes Original Medicare leaves behind — and it’s standardized so you can shop on price.
It pairs with Original Medicare (Parts A & B), not Medicare Advantage, and has a one-time 6-month guaranteed-issue window.
It pairs with Original Medicare (Parts A & B), not Medicare Advantage, and has a one-time 6-month guaranteed-issue window.
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Medicare Supplement (Medigap)
Fills Medicare's cost-sharing gaps
- Fills Original Medicare (Parts A & B) gaps — deductibles, copays, coinsurance Medicare doesn’t pay
- Standardized lettered plans (Plan A–N): the same letter = the same benefits from any insurer, so you comparison-shop on price
- Requires enrollment in Original Medicare; cannot be used with Medicare Advantage (Part C)
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Medigap Open Enrollment
Guaranteed issue — two conditions
- A 6-month window beginning when the individual is BOTH age 65+ AND enrolled in Medicare Part B
- During this window: insurers cannot deny coverage or charge more based on health (guaranteed issue, no medical underwriting)
Key conceptMedigap is not a replacement for Medicare and does not work with Medicare Advantage. The 6-month open enrollment requires both age 65+ and Part B enrollment — age alone doesn’t start it. (More detail in Chapter 13.)
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Top Exam Tips — Types of Limited Health Policies
1. Accident-only: accidents only, sickness fully excluded — the most restrictive limited policy.
2. Critical illness (dread disease): lump-sum cash on diagnosis, usable for any purpose; not a medical-bill payer.
3. Hospital indemnity: fixed dollars per day, paid regardless of actual charges; not coordinated with other coverage.
4. Credit disability: pays the lender the loan payment (not the insured). Blanket: group under one policy, no individual certificates.
5. Dental: tiered (preventive ~100%, basic 70–80%, major/ortho ~50%); annual max ~$1,000–$2,000.
6. Medigap: fills Original Medicare (A&B) gaps; standardized lettered plans; not with Medicare Advantage; 6-month guaranteed-issue OEP at age 65+ AND Part B.
2. Critical illness (dread disease): lump-sum cash on diagnosis, usable for any purpose; not a medical-bill payer.
3. Hospital indemnity: fixed dollars per day, paid regardless of actual charges; not coordinated with other coverage.
4. Credit disability: pays the lender the loan payment (not the insured). Blanket: group under one policy, no individual certificates.
5. Dental: tiered (preventive ~100%, basic 70–80%, major/ortho ~50%); annual max ~$1,000–$2,000.
6. Medigap: fills Original Medicare (A&B) gaps; standardized lettered plans; not with Medicare Advantage; 6-month guaranteed-issue OEP at age 65+ AND Part B.
Exam vocabulary
Key Terms to Know
Accident-Only Insurance
Covers losses solely from accidental bodily injury; sickness and disease are excluded.
Critical Illness Insurance
Pays a lump-sum cash benefit upon diagnosis of a specified serious illness; usable for any purpose.
Dread Disease Insurance
Another name for critical illness insurance; pays a lump sum on diagnosis of a listed serious illness.
Hospital Indemnity Insurance
Pays a fixed dollar amount per day of hospital confinement regardless of actual charges or other insurance.
Credit Disability Insurance
Pays scheduled loan payments directly to the creditor if the borrower becomes disabled; benefit goes to the lender.
Blanket Insurance
Group coverage under one policy for common-affiliation members without individual certificates; adjusts automatically.
Prescription Drug Coverage
Covers outpatient medications using copays, coinsurance, deductibles, and formulary tiers.
Dental Insurance
Tiered coverage for preventive, basic, major, and orthodontic services, usually with an annual maximum benefit.
Medicare Supplement (Medigap)
Private coverage filling Original Medicare Parts A & B cost-sharing gaps; standardized lettered plans.
Medigap Open Enrollment Period
A 6-month guaranteed-issue window starting when the individual is both age 65+ and enrolled in Medicare Part B.
Like learning this way? There's a whole library of them.
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