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11 Things to Consider Before You Buy Cancer Insurance

Find out whether cancer insurance makes sense for you and how to avoid the pitfalls of cancer health insurance policies.

11 Things to Consider Before Buying Cancer Insurance

If you, your spouse, or your child were diagnosed with cancer, would your current health insurance plan cover all of the potentially astronomical costs that could be associated with its treatment?

IIf not, would you or your loved ones be able to afford your portion of those bills—or the many bills your plan doesn’t address, like experimental treatments, visits to out-of-network specialists, home health care, or even your daily living expenses?

IIt isn’t unusual for people of all walks of life to ponder these questions given the alarming prevalence of cancer, which is the second most common cause of death in the US (it accounts for nearly one of every four deaths), and its treatment. A couple of examples:

  • According to the American Cancer Society’s Cancer Facts & Figures 2015 report, men in the US have a one in two chance of developing some form of cancer during their lifetimes, and a one in four chance of dying from it
  • American women, on the other hand, have a one in three chance of developing cancer within their lifetimes, and a one in five chance of dying from it
  • Also, it’s expected that just over 1.6 million new cancer cases will be diagnosed this year, and that nearly 600,000 people in the US will die of cancer during 2015

Finally, the Agency for Healthcare Research and Quality recently estimated that the “direct medical costs” tied to cancer (in 2011) were $88.7 billion, with half of those costs coming from outpatient or office-based care, slightly over a third coming from inpatient hospital stays, and 11 percent coming from prescription medications.

A Newer Kind of Insurance, But Do You Need It?

Given all of the above, is there any question as to why an increasing number of insurance companies-- Aflac, Colonial Life, Humana, and Mutual of Omaha among them—are offering supplemental policies that focus on, and attempt to reduce the costs associated with, cancer diagnosis and care?

Another reason that cancer insurance plans seem to be showing up more and more is that many basic health insurance plans don’t cover all of the costs that tend to follow in the wake of a cancer diagnosis.

The question is: are the premiums you’ll pay for this type of insurance policy worth the peace of mind it may provide?

Unfortunately, you’ll have to answer that question on your own after weighing all of the options in front of you, although the following pieces of information should help you come to a conclusion one way or another.

  1. This type of insurance is to reduce the price of cancer treatment

    That’s one of the most important things to keep in mind if you’re thinking of paying for this kind of insurance.

    In other words, the point isn’t to take the place of the benefits provided by a traditional (basic) health insurance policy. Instead, cancer insurance is supposed to complement those benefits by helping you cover some of the expenses your basic policy doesn’t address.

  2. Cancer insurance policies can cover a lot of costs

    Depending on the kind of policy you buy, cancer insurance can cover a wide range of both medical and non-medical costs should you or a loved one be diagnosed.

    Some of the medical expenses that tend to be covered by these plans: co-pays, deductibles, hospital stays (especially lengthy ones), visits to out-of-network specialists, and various tests, treatments, and procedures. Non-medical expenses that may be covered, on the other hand, include those related to child care, dietary assistance, and even travel and lodging when treatment is far away from home.

  3. That said, they often won’t cover all of them

    All cancer insurance policies don’t cover every one of the expenses mentioned above, and even the ones that do may still leave “gaps” in your coverage—which means you could be left holding a bill that you'll be responsible for paying.

    Also, some cancer insurance policies don’t cover any of the expenses discussed so far. In fact, a few of them simply offer a specific lump-sum payment that’s sent out shortly after you are diagnosed. So, don’t go into these situations assuming all plans basically offer the same benefits or coverage, because that’s not necessarily the case.

  4. You may not be able to get this kind of insurance if you were diagnosed with cancer in the past

    Some companies will turn you down if you’ve been diagnosed with or treated for certain kinds of cancers—usually internal cancer (cancer found on or in an internal organ), leukemia, or melanoma—in the last three or five years. Others may turn you down if you’ve ever been diagnosed and treated for cancer.

    At least one provider also will consider you ineligible for cancer insurance if you’ve been diagnosed with or treated for a variety of other health issues, too, such as Hodgkin’s disease, AIDS, AIDS Related Complex, or if you’ve tested positive for the Human Immunodeficiency Virus (HIV).

    So, again, it’s a good idea to take the time to read the fine print—or even an insurance company’s FAQ page—before you get too excited about a particular plan.

  5. Pay close attention if you have a family history of cancer

    Cancer insurance doesn’t make financial sense for everybody. For example, if you’re young, healthy, not risk-averse, and you don’t have a family history of cancer, you might want to use the money you’d hand over for this type of policy for something else.

    If a number of your relatives have been diagnosed with or treated for various kinds of cancer, though, purchasing one of these plans may be more worth your while than it is for people without a family history of the disease.

  6. It’s possible your basic health insurance plan is more than enough for you and your family

    Piggybacking off of the previous point, if you have an average or better risk of developing cancer, it may make more sense for you to just rely on your basic health plan, rather than one of these supplemental plans, to protect you and your loved ones should you be diagnosed.

    Or, you could take the money you would spend on cancer insurance and use it to boost or upgrade your basic plan, especially since this option is sure to provide you with an even wider range of benefits.

  7. Critical illness insurance may make sense for you, too

    Rather than focus entirely on cancer, this kind of insurance, which has been popular outside of the US for some time now, provides supplemental coverage for other critical illnesses, too—with heart attack and stroke being the most common, but others, like kidney failure, major organ transplants, and even ALS (also known as Lou Gehrig’s disease) sometimes being covered as well.

    Critical illness insurance policies usually pay out a lump sum shortly after a diagnosis has been made, and like some of the cancer insurance policies mentioned earlier, the resulting payment can be used for medical or non-medical expenses.

    Like cancer insurance, though, critical illness plans have their fair share of critics, the majority of whom say there are better ways for you to use your money to prepare for one or more of these illnesses.

  8. If you’re enrolled in Medicare, Medigap also could be an option

    Admittedly, you have to be enrolled in Medicare to be able to take advantage of one of these supplemental insurance policies, but if that describes you, Medigap may be a better option for you than cancer insurance.

    The reason: with Medicare Part B covering 80 percent of most of the outpatient treatments you’re likely to encounter should you be diagnosed with certain types of cancer, Medigap could help you pick up the remaining 20 percent of the bill.

  9. You can’t rely on cancer insurance alone

    You’ll probably want to begin by making sure whatever basic health insurance plan you have is up to snuff before you give any serious consideration to the kind of supplemental coverage that cancer insurance policies provide.

  10. Don’t assume that duplicate coverage will provide you with double the benefits

    Not only can it be costly to double up on insurance coverage—by, say, purchasing a cancer insurance policy that covers the same ground as your basic health plan—but it’s unnecessary, too.

    Instead, your goal should be for your cancer insurance policy to fill in some of the gaps that may be left open by your basic health plan.

    Given this, carefully compare the benefits associated with your basic health insurance plan to any cancer insurance policies you may be considering to ensure there isn’t too much overlap between the two in terms of what is covered.

  11. If you do decide to go with a cancer insurance plan, read the fine print before you sign on the dotted line

    This has been said a few times before, but it probably can’t be overstated. That’s because these plans and policies tend cover a wide range of costs and treatments and services—to the point that you can’t assume what is covered in one also will be covered in another. In fact, some only provide you with a single lump-sum payment that basically can be used however you wish.

    Also, some policies have waiting periods tied to them that force you to wait weeks and even months before your coverage kicks in, while others stop paying out after a certain period of time.

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