Cancer insurance can bring you peace of mind, but whether it's
right for you depends on your family medical history and your
financial situation.
As supplemental medical coverage, cancer insurance typically
costs about $20 to $40 per month and will pay the cost of those
things medical insurance typically doesn't cover.
Out-of-pocket medical costs -- such as co-payments, co-insurance
or deductibles -- are increasing, creating a gap that patients must
bridge before
medical insurance
takes over. Alex Bagby, director of health products at Oklahoma
City-based American Fidelity Assurance Company, says many people
need supplemental insurance to help with the costs.
Cancer insurance also covers expenses a typical medical
insurance plan won't pick up. For instance, it may cover you if you
seek care outside your health plan's provider network. It also may
cover transportation to and from the hospital and pay your mortgage
if you can't work while undergoing treatment. For people who are
diagnosed with late-stage cancer, it may cover experimental
treatments that typically aren't covered by standard health
insurance.
The National Cancer Institute has information on
various types of cancer and treatment
.
Types of cancer insurance
Three common types of cancer insurance are expense-incurred,
indemnity and lump-sum policies.
- With an expense-incurred policy, the insured gets a
percentage of expenses for all covered treatments, up to the
policy's maximum dollar limit.
- An indemnity policy covers expenses for all approved
treatments but places a fixed dollar limit on each treatment
regardless of the actual cost of care.
- With a lump-sum plan, you get the amount you are insured for
in one payout if you are diagnosed with cancer.
If your policy reimburses you for expenses, benefits may be paid
by the day, by the treatment or for each trip to the hospital or
treatment center, says Bagby.
Under a lump-sum policy, you can use the money for anything,
whether it's a medical treatment or a vacation. If you had a
$30,000 policy, you would get a check with no questions asked about
how you plan to spend the money.
"It pays directly to the insured, with no restrictions on when
and what they spend the benefits on," says Steven Stecher,
president of Carmel, Ind.-based Washington National Insurance Co.
"It helps cover things that normal major medical plans don't
cover."
The premium you pay for a lump-sum policy isn't based on your
family history of cancer. However, you will pay more if you choose
a lump-sum payout. According to Stecher, it would cost a
35-year-old $20 a month for $30,000 in lump-sum coverage. That same
35-year-old would pay $18.60 a month for a plan where payouts were
issued per expense.
At Washington National, policyholders who choose to pay higher
premiums can buy an option that returns their money if no claims
are made after 20 years. The monthly rates are lower if a
policyholder doesn't choose the return-of-premium benefit,
however.
Not everyone qualifies to buy cancer insurance
There is a catch with cancer insurance: You can't buy it once
you are diagnosed with cancer. Nor will you be eligible if you have
had cancer within the last five years. Since not everybody is going
to get cancer, buying cancer insurance boils down to making a
personal choice. You could end up paying the $20 to $40 each month
for years without ever using your policy.
"Do you need it? No," says Kevin Flynn, president of
Philadelphia-based HealthCare Advocates Inc., a company that helps
people find doctors, select nursing homes and solve insurance
problems.
According to Flynn, cancer insurance may make sense for people
who have a family history of the disease and don't have money put
away to cover the unexpected costs associated with cancer.
Treatment and recovery time can result in lost wages and other
unforeseen expenses that you may not be equipped to handle.
Proponents of cancer insurance say it's something everyone
should consider, given the high rate of the disease among adults.
According to the American Cancer Society, U.S. men have slightly
less than a one in two lifetime risk of getting cancer. Women have
slightly more than a one in three risk of developing cancer.
Cancer insurance typically is offered through employers as a
voluntary, employee-paid product. It can be obtained as
health insurance for individuals
or through group plans, depending on the insurance company, adds
Bagby.
The underwriting process
Unlike buying individual health insurance, where you have to
undergo a physical, the underwriting process for cancer insurance
is fairly painless. Insurers typically ask three to five questions,
including whether or not you have had cancer in the last five to 10
years. If you answer "yes" to any of the questions, you won't be
eligible.
Age is also a pricing factor for most policies. The older you
are, the more you will pay to reflect the increased likelihood that
you'll get cancer. Most policies don't take gender into account
when setting rates.
For example, at American Fidelity Assurance Company, you will be
asked:
- If you've been diagnosed with AIDS, HIV or AIDS-related
complex (ARC).
- If you've been diagnosed with or treated for cancer within
the past 10 years.
- Whether you've been advised by a doctor to have testing to
determine whether you have cancer.
Washington National offers an indemnity cancer insurance policy
and a lump-sum policy. For the indemnity policy, the company wants
to know:
- If you've been treated for or diagnosed with cancer.
- If you've been treated for or diagnosed with a pre-leukemic
condition, a premalignant condition or a condition with malignant
potential within the last 10 years.
- If you've been treated for or diagnosed with AIDS, HIV or ARC
in the last 10 years.
As at American Fidelity, if you answer yes to any of these
questions, you won't qualify.
Read your policy carefully
There could be limitations on the cancer insurance coverage you
buy, depending on the insurer you choose. Flynn says your insurance
company may give you only a short window of about 60 days after
your diagnosis to file a claim. If you wait 61 days, you may be out
of luck, he says. "You have to read the fine print."
The Illinois Department of Insurance has prepared
an overview of cancer insurance issues
.