What is the main purpose of catastrophic health insurance?

The main purpose of catastrophic health insurance is to provide financial support for extreme healthcare costs. This type of insurance is designed to protect individuals from very high out-of-pocket expenses that could arise from serious accidents or illnesses. It typically has a low monthly premium but features a high deductible, meaning the policyholder covers routine medical expenses until the deductible is met. Once the deductible is reached, the insurance kicks in to pay a significant portion of the costs for major medical incidents, such as hospitalization or emergency surgery.

This focus on covering major health crises rather than everyday medical needs distinguishes it from traditional health insurance plans, which often cover a broader spectrum of healthcare expenses, including routine check-ups and minor treatments. Therefore, catastrophic health insurance is specifically structured to shield policyholders from financial ruin in the event of severe health situations, making it an essential safety net for those who may have limited resources but still want protection against significant medical expenses.