Which of the following best describes a dreaded disease policy?

A dreaded disease policy is specifically designed to provide coverage for illnesses that are typically severe, life-threatening, or incurable. This type of insurance often focuses on diseases like cancer, heart disease, or other major medical conditions that can have a profound impact on an individual's health and financial stability.

The policies aim to alleviate some of the financial burdens associated with such illnesses, recognizing that they often require extensive treatment and care that can be costly. Thus, the defining characteristic here is the emphasis on serious and incurable conditions, which aligns perfectly with the description provided by the correct answer.

In contrast, options such as a temporary illness, preventable disease, or common cold do not fit the profile of what a dreaded disease policy targets. Temporary illnesses are typically short-lived, while preventable diseases can often be avoided through vaccination or healthy lifestyle choices. A common cold is generally mild and self-limiting, which doesn't align with the coverage focus of dreaded disease policies.