What is defined as a limited risk policy?

A limited risk policy is designed to provide coverage for specific types of conditions or circumstances rather than offering comprehensive protection for a broad range of health issues. A dread disease policy exemplifies this type of coverage, as it focuses on providing financial support for serious illnesses like cancer or heart disease. These policies typically pay out a predetermined amount if the insured is diagnosed with one of the specified diseases, thus limiting the scope of the insurance to particular risks.

On the other hand, comprehensive health insurance provides broad coverage for various medical expenses and is not limited to specific diseases. Basic health coverage usually encompasses essential medical services but is still more extensive than a limited risk policy. Long-term care insurance is specifically designed to cover the costs associated with long-term care services, which could include assistance with daily activities and does not fall under the category of limited risk. Therefore, a dread disease policy is the most accurate representation of a limited risk policy within the context of the given options.