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Specified or dread disease policies provide benefits only if you get the specific disease or group of diseases named in the policy. For example, a policy might cover only medical care for cancer. Because benefits are limited in amount, these policies are not a substitute for broad medical coverage. Nor are specified disease policies available in every state.
In most states, the two have merged, but each group still covers the expenses for which they were initially created. Over the years the tax advantages they originally enjoyed have deteriorated and many states have removed their exempt status. Additionally the federal Tax Reform Act of 1986 now makes them taxable as insurance companies.
If the employee fails to apply during that eligibility period, then the employee will be required to take a physical examination and must qualify as if on an individual basis. This is how an insurer can afford to cover a group of people without individual selection. Otherwise some people might choose not to enroll until they discover they have an illness or they become disabled, and requiring a physical exam after the eligibility period helps to preclude this event.
When applying for a contributory group plan, the employer needs to solicit enough employees to demonstrate to the insurer that a sufficient percentage want the coverage and are willing to pay a share of the premium. For a non-contributory plan, 100% of the eligible employees must be included.
The primary beneficiary is the first person in line to receive the benefit in the event of the death of the policy holder. They can also name a second beneficiary who would receive the benefit in the event the primary beneficiary dies before the insured. Some policies can include a third beneficiary who would be in line after the first two.
Although you can select a plan or buy a policy that should cover most medical, hospital, surgical, and pharmaceutical bills, no single policy covers everything. Moreover, you may want to consider additional single-purpose policies like long-term care or disability income insurance. If you are over 65, you may want a Medicare supplement policy to fill in the gaps in Medicare coverage.
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