A few years ago a company selling cancer insurance came to our place of work. They advertised free consultations around the office, flyers, handouts when we came through the door, an email and what clinched the deal were the free donuts they were giving away to anyone who showed up. Okay, the free donuts and my curiosity.
I had never heard of cancer insurance before and wanted to see what it was all about. After all, in my family alone I knew of one person who died of pancreatic cancer, one person with skin cancer, and another person with testicular cancer.
What is Cancer Insurance?
Cancer insurance is a limited policy that pays specifically for the actual diagnosis of cancer, and/or treatment of cancer and related illnesses caused by cancer or resulting from cancer therapy.
Regardless of what your health insurance policy will pay in the event that you are diagnosed with cancer, this policy will pay out on top of it with full benefits. There are typically two types of cancer insurance available: an expense-incurred policy, and an indemnity policy. The expense-incurred policy pays a percentage for all expenses listed up to the benefit amount or policy’s maximum dollar limit. The indemnity policy places a fixed dollar limit on each individual benefit allowed, which is unrelated to the actual expense incurred.
Some policies may only cover certain types of cancer, and there are generally riders that you can purchase to increase the benefits of the policy.
The Benefit Policy Offered to Me
I was working for the state of Texas, and the particular plan being offered was through the United Teacher Associates Insurance Company (UTA). The type of plan that they were offering me was what is known as a First Diagnosis Cancer Benefit Policy (an indemnity policy). This plan would pay me the maximum benefit amount due in a lump sum, cash (which was dependent on the amount of coverage I wanted to pay for) on the first diagnosis of internal cancer or malignant melanoma.
How Much Does it Cost?
As with all insurance policies, the costs will vary. For the policy I was offered, the benefit amount was between $10,000 and $50,000, and my monthly premium would have cost between $9 and $45 depending upon which amount I chose.
The optional riders I was given were First Diagnosis Heart Attack and First Major Heart Surgery Rider (a lump sum of between $10,000 and $50,000), Intensive Care Unit Benefit Rider ($300-$600 per day as a result of any injury or sickness requiring ICU treatment, not to exceed 30 days for each period of confinement), and a Cash Rider. The First Major Heart Attack Surgery Rider would cost between $8 and $40 per month, the ICU Rider would cost $3 per month, and the Cash Rider came with the policy itself.
The Cash Rider really interested me. Basically, after my policy was in force for 20 years or at the age of 65 (whichever occurs first), 100% of the premiums I paid would be paid back to me by check, less any claims paid to me. After the money is returned to me, I would be able to continue the policy with my premium reduced to 50% of what it was.
Limits of Cancer Insurance Policies to Look Into
With contracts and insurance, there is always a catch. Here are some things to watch out for as well as to consider:
- Cancer Insurance is Not a Substitute for Health Insurance: First you should know that you need a separate health insurance policy. As you can see from above, this type of insurance is very limited in scope.
- Waiting Periods: There are typically waiting periods with cancer insurance. This means that you must wait up to a certain number of days from the effective date of the contract before a cancer policy will pay any benefits. If cancer is diagnosed during this probationary period, it may not be covered.
- Pre-Existing Conditions: Coverage may be denied in a scenario where cancer develops after the probationary period but symptoms were present prior to the effective date of the coverage.
- Diagnosis Requirements: There needs to be actual proof that you have been diagnosed with the specific cancer covered by the policy. Many insurance companies will require a pathology report to verify diagnosis of cancer (if the pathology test is unsafe for some reason, a clinical diagnosis may be accepted).
- Duplicate Coverage: You want to check with your current health insurance plan to make sure you are not paying for duplicate coverage. Note that cancer insurance policies will typically pay on top of any benefit you receive from your health insurance company.
Do you have a cancer insurance policy? What does it look like, and have you ever made a claim?