Cancer insurance is a specialized type of health insurance designed to help offset the costs associated with a cancer diagnosis. It can help pay for specialized treatments and therapies that otherwise could create a significant financial burden, even for those covered by a standard health insurance policy.
The number of cancer cases in the U.S. highlights the potential need for a cancer policy. Each year, approximately 1.9 million people are diagnosed with some form of cancer. Sadly, the disease claims more than 600,000 lives per year, making it the second leading cause of death in the United States. While many people diagnosed with cancer ultimately survive without proper coverage, the financial burden associated with treatment can be devastating.
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The High Cost of Cancer Treatment
In addition to the emotional and physical strain, the stress of a cancer diagnosis can be compounded by significant financial pressure. In the first year after a diagnosis of cancer, the average cost of medical care and drugs may surpass $42,000, with some treatments costing $1 million or more.
Unfortunately, having health insurance does not always help. Cancer patients are increasingly shouldering large bills due to annual deductibles and other health plan cost-sharing measures. For instance, an average leukemia patient covered by private health insurance may end up paying more than $5,100 out of pocket in the year after diagnosis.
Even those with Medicare coverage can face sizable bills. For example, with a fee-for-service Medicare plan, a patient diagnosed with blood cancer may find themselves responsible for more than $17,000 in out-of-pocket costs in the year following their diagnosis. These large expenses may also contribute to the fact that cancer patients are 2.65 times more likely to declare bankruptcy than those without the disease.
Growing Cancer Rates, Growing Need For Affordability
An estimated 300,590 new cases of breast cancer are expected to be diagnosed in the U.S. in 2023. Other commonly diagnosed types of cancer include lung, prostate, and colorectal cancers. In many cases, treatment options include surgery, radiation therapy, chemotherapy, immunotherapy, and targeted therapy.
While the prevalence of cancer in the U.S. is concerning, there is room for optimism. Thanks to advances in medical science, it’s common for cancer patients to have increased survival rates and extended lifespans. However, innovative treatments typically come with high costs. This is where cancer insurance can offer essential support. By providing supplemental coverage to standard health insurance, cancer insurance helps manage these substantial costs, offering financial relief during an undoubtedly difficult period.
How Does Cancer Insurance Work?
Cancer insurance is a form of supplemental insurance that is typically designed to work alongside your major medical insurance. It’s used to alleviate the financial burden associated with a cancer diagnosis. Cancer insurance policies can pay out a lump sum upon diagnosis or cover additional expenses that standard health insurance may not cover, such as travel costs or lost income.
You can have a cancer insurance policy without other forms of health insurance. However, since cancer policies provide limited coverage, they are generally more practical alongside a comprehensive health insurance plan. This allows you full health coverage and extra coverage for the unexpected costs of cancer treatment.
To be eligible for cancer insurance, you generally cannot have pre-existing cancer conditions, and there may be a waiting period before your coverage begins. Suppose you’ve been previously diagnosed with or treated for cancer or you have other conditions that increase the risk of cancer, such as HIV/AIDS. In that case, you may not be eligible to purchase a cancer insurance policy.
What Does Cancer Insurance Cover?
Cancer insurance generally covers medical and non-medical expenses that can occur after a cancer diagnosis. Medical expenses may include treatments like chemotherapy, radiation, surgery, extended hospital stays, and lab tests.
Non-medical costs could include loss of income and expenses such as the cost of childcare or home healthcare. Your coverage may vary depending on the policy and provider you choose.
Cancer Policy Exclusions
Certain types of cancers may not be covered by a cancer insurance policy. For example, non-melanoma skin cancer is typically not covered, and payouts may be reduced for early-stage cancers. Some policies may also exclude certain treatments or procedures. Since policies can vary widely, it’s important to read your policy carefully and make sure you understand your policy’s exclusions and limitations.
Types of Cancer Insurance
There are various types of cancer insurance, each with a structure that is designed to cater to specific needs and financial situations. Here’s a look at three common options.
Lump-Sum Cancer Insurance
Lump-sum cancer insurance pays you a predetermined benefit amount when you’re diagnosed with a covered form of cancer. Once you receive the payout, you are free to use the funds as you choose. For example, you may use your benefit to pay your medical bills, replace lost income, or cover any other expenses you incur.
Expense-Incurred Cancer Insurance
Expense-incurred cancer insurance reimburses you for a percentage of your medical expenses directly related to your cancer treatment, such as the cost of surgery, radiation, and chemotherapy. While some expense-incurred policies deal directly with the healthcare provider, many require you to pay your medical expenses out of pocket and request reimbursement. It’s also common for expense-incurred policies to have a maximum total payout amount.
Cancer Indemnity Insurance
Cancer indemnity insurance offers a predefined fixed benefit amount for each covered cancer-related service, such as hospital stays or specific treatments. Regardless of actual costs, you receive a fixed amount for each incident. The benefit is paid directly to you, providing financial flexibility during the treatment period.
How Much Does Cancer Insurance Cost?
The cost of a cancer insurance policy can vary depending on a wide variety of factors. However, in general, the average person can expect to pay between $10 and $50 per month for cancer policy coverage.
Factors That Impact Cancer Insurance Premiums
Some factors that influence the cost of a cancer insurance policy include:
- Age: Typically, older individuals pay higher premiums due to the increased risk of developing cancer as they age.
- Health history: If you have a personal or family history of cancer, insurers may charge more due to the increased likelihood of a future diagnosis.
- Current health status: If you have certain health conditions, like smoking-related illnesses, that increase the risk of developing cancer, your premiums may be higher.
- Plan benefits: Policies with comprehensive benefits or higher payout limits typically cost more.
- Geographic location: Insurance companies may factor in where you live, as cancer rates can vary by region. For example, regions with high pollution levels may have higher premiums due to a potentially higher cancer risk.
Should You Get a Cancer Insurance Policy?
- Financial protection
- Coverage for non-medical costs
- Emotional comfort
- Freedom of choice
- Limited coverage
- Premium cost
- Overlap with existing coverage
- Limitation on pre-existing conditions
Before deciding whether to purchase a cancer policy, take the time to weigh the pros and cons. This can help you make an informed decision. Here’s a brief look at some important factors to consider.
- Financial protection: Cancer insurance can provide a financial safety net. It covers many costs traditional health insurance does not, reducing out-of-pocket expenses during treatment.
- Coverage for non-medical costs: In addition to medical bills, cancer policies can help with non-medical expenses like travel, accommodation, or lost income during treatment.
- Emotional comfort: Knowing you have an extra layer of financial support can contribute to emotional comfort during a trying time, possibly reducing stress associated with the financial aspect of cancer treatment.
- Freedom of choice: Cancer insurance can offer more flexibility in choosing healthcare providers and treatments. The additional funding you receive through the policy may allow you to seek out specialized or cutting-edge treatments that a traditional health insurance policy might not cover.
- Limited coverage: Cancer insurance does not pay out unless you’re diagnosed with a covered form of cancer. It does not provide coverage for other serious illnesses or healthcare expenses.
- Premium cost: Cancer insurance premiums can be costly, particularly for those with increased risk factors.
- Overlap with existing coverage: Some expenses may already be covered by your existing health insurance, leading to redundant coverage.
- Limitation on pre-existing conditions: If you’ve already been diagnosed with cancer or a condition that increases the chances of getting cancer, you may not be able to purchase a cancer policy.
When to Consider Cancer Insurance
Purchasing a cancer insurance policy may be beneficial if one or more of the following circumstances apply:
- Family history of cancer: Your family has a strong history of certain types of cancer, which may indicate a hereditary risk.
- Lifestyle and occupational risks: You work in a profession that exposes you to cancer-causing substances (such as asbestos or certain chemicals), or you have lifestyle habits known to increase cancer risk (such as smoking or excessive sun exposure).
- Limited health coverage: Your primary health insurance has high deductibles or copayments, which could result in high out-of-pocket costs for cancer treatments.
- Lack of emergency savings: You do not have sufficient funds on hand to cover unexpected costs associated with a cancer diagnosis.
How to Get Cancer Policy Coverage
If you’ve decided that cancer insurance may be right for you, it’s time to shop for a policy. The following steps can help you obtain the coverage you need.
1. Assess your personal risk factors to determine what coverage you need
To determine the type of cancer coverage that suits your needs, begin by thoroughly assessing your personal risk factors. Evaluate your family’s health history, particularly regarding cancer diagnoses and outcomes. Also, consider environmental exposures and job risks, such as frequent exposure to toxins or carcinogens that could increase your chances of a cancer diagnosis.
2. Review your current health insurance coverage to identify gaps
Next, analyze your existing health insurance policy to identify any gaps in coverage that a cancer insurance policy could address. Pay attention to factors like coverage limits, deductibles, and exclusions. Understanding the limitations of your existing policy may help you understand the type of cancer policy that is likely to meet your needs.
3. Compare your cancer insurance policy options
Once you clearly understand your needs, you can begin to compare your policy options. Take the time to research and compare different cancer insurance plans, considering their costs, benefits, and limitations. If you’re struggling with this step, consider turning to a licensed health insurance agent for help.
4. Select the plan that suits your needs
After carefully considering your risk factors, existing coverage, and policy options, you’re ready to choose a cancer insurance plan that aligns with your specific needs and preferences.
Before making your decision, evaluate factors such as coverage limits, waiting periods, and premiums. Take the time to carefully read the policy details, ensuring you clearly understand the terms and conditions. This can help you select your plan with confidence.
5. Apply and pay your premium for coverage
Finally, submit your application and pay the required premium. Then, wait for the insurance carrier to provide you with written confirmation of coverage. Keep in mind that you may have a required waiting period before your coverage goes into effect.
Putting It All Together
Cancer insurance can serve as a valuable supplement to your existing health insurance coverage, providing additional financial support for medical and non-medical expenses related to cancer treatment. Since the high cost of cancer treatment can create a significant financial burden, some individuals may find a cancer policy beneficial. This is particularly true if you have a family history of cancer, face occupational or lifestyle hazards, or you’re not financially prepared to handle the high cost of unexpected cancer treatments.
Remember that there are different types of cancer insurance policies, each designed to meet a specific set of needs. Common options include policies that pay a lump sum upon diagnosis, those that cover medical expenses directly related to cancer treatment and indemnity policies that pay a set dollar amount for each treatment or hospital visit.
When choosing your plan, consider your personal health risks, current coverage, and the cancer insurance policies available. Remember that a licensed health insurance agent can help you weigh your options.