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Catastrophe insurance is a type of protection that consumers seek in order to cover then against serious medical emergencies. People who enroll within a catastrophe insurance program realize that everyday medical costs like doctor check-ups or influenza vaccinations are rarely covered under this type of health plan, and it is designed only to be implemented with large-scale medical problems that would require continuous care or extensive surgery. The term "catastrophe insurance" can also apply to homeowners policies to allow additional protection where natural events like hurricanes or wildfires cause extensive damage.
There are several benefits of obtaining catastrophe insurance as a supplement or in place of traditional health insurance. Cost is easily the leading factor that consumers give for choosing to go this route, because the monthly medical premiums are often much less than comprehensive medical programs. If a major surgery like a heart value bypass or a kidney replacement were ever necessary for these customers, this type of insurance would generally cover 80 to 100% of the costs involved. Of course, catastrophe insurance often requires very comprehensive medical screenings before a consumer could be approved for this type of coverage, so many people are automatically ineligible due to previous health problems.
The downsides to catastrophe insurance are just as numerous. Besides the fact that very few consumers would qualify for this type of insurance coverage, it is normally applicable to only a few specific types of incidents. For example, a patient may face life-threatening conditions from a sickness or disease and require an extended hospital stay, but under her policy, there is a good chance that the “catastrophic” definitions would not be met. In fact, the patient may have to be inside a hospital for weeks before her coverage would pay anything at all, so this definitely is not an optimal insurance plan for everyone.
Another type of catastrophe insurance applies to physical property, and this type of coverage would only be applicable in very specific types of situations as well. If a homeowner had a flooding problem, for example, and the damage was relatively minor, a claim would be submitted under her standard homeowner’s insurance. For the catastrophic insurance to come into effect, the damages would have to reach a certain percentage of the home’s overall value, which is predetermined before taking out the policy. Even though catastrophic insurance for property provides very specific protection and will often never be utilized, residents that have faced fires, tornadoes, or other forms of natural disaster have easily collected more than a lifetime’s worth of premiums due to their coverage decision.