If you, your spouse, or your child were diagnosed with cancer, would your current health insurance plan cover all of the potentially astronomical costs for treatment?
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 daily living expenses?
It isn’t unusual for people of all walks of life to ponder these questions, especially considering the prevalence of cancer. It is the second most common cause of death in the US, killing 1,600 Americans every day.
Cancer treatments make up about 10 percent of all health care expenses in America. No other disease comes close.
A study by the American Cancer Society reveals startling stats:
- Men in the US have a one in two chance of developing some form of cancer. One in four American men will die from cancer.
- American women have a one in three chance of developing cancer within their lifetimes, and a one in five chance of dying from it.
- More than 1.6 million new cancer cases will be diagnosed this year. Over 600,000 people in the US will die of cancer during 2017.
Finally, the Agency for Healthcare Research and Quality estimates that the “direct medical costs” tied to cancer (in 2014) were $87.8 billion. More than with half of those costs come from outpatient or office-based care. 27 percent of costs come from inpatient hospital stays.
Fortunately, health insurance companies now offer a plan specifically designed to alleviate these costs. It's called cancer insurance, though some companies offer it in a bundle of critical illness insurance.
Cancer insurance is intended to be a supplemental insurance product that works in conjunction with your primary health insurance plan.
A Newer Kind of Insurance, But Do You Need It?
Given all of the above, it's not surprising that an increasing number of insurance companies offer policies for cancer diagnosis and care.
Cancer insurance is more and more common because many basic health insurance plans don’t cover all of the costs from a cancer diagnosis.
The question is: are the premiums you’ll pay for this type of policy worth the peace of mind it provides? Does the coverage justify the cost? And when does it make sense to buy a cancer insurance?
"The right time to consider a cancer insurance policy is when you are in good health," says Jesse Slome, director of the American Association for Critical Illness Insurance.
Unfortunately, the answers to those questions depend on your personal situation. Factors like your financial security, your health, and your form of cancer all impact whether or not cancer insurance is right for you.
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The following pieces of information should help you come to a conclusion one way or another:
- 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 buying this kind of insurance.
In other words, the point isn’t to take the place of the benefits provided by your primary health insurance. Instead, cancer insurance is supposed to complement those benefits by helping you cover some of the expenses your basic policy doesn’t pay for.
- 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.
These are some of the expenses that tend to be covered by these plans:
- Hospital stays (especially lengthy ones)
- Visits to out-of-network specialists
- Various tests, treatments, and procedures
- Child care
- Dietary assistance
- Travel and lodging when treatment is far away from home
- That said, they often won’t cover all of them.
Few cancer insurance policies cover every one of the expenses mentioned above. Even the ones that do may still leave “gaps” in your coverage. That 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. A few of them, like Aflac, simply offer a specific lump-sum payment that’s after you are diagnosed.
Don’t go into these situations assuming all plans basically offer the same benefits or coverage, because that’s not the case. To understand how different plans work, let QuoteWizard help you find the best cancer insurance plan.
- 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 for a variety of reasons. "It may not be obtainable if you have already been diagnosed with a cancerous condition or you are past the age when insurance companies will issue a new policy," says Slome.
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. That includes Hodgkin’s disease, AIDS, AIDS Related Complex, or if you’ve tested positive for 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.
- Pay close attention if you have a family history of cancer.
Cancer insurance doesn’t make sense for everybody. Are you young, healthy, not risk-averse, and without a family history of cancer? You might want to use the money you’d hand over for this type of policy for something else.
Have a number of your relatives been diagnosed with or treated for various kinds of cancer? Purchasing one of these plans may be more worth your while than it is for people without a family history of the disease.
- 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, you may want to rely on your basic health plan. A supplemental cancer insurance plan may be unnecessary.
You could also take the money you would spend on cancer insurance and use it to boost or upgrade your basic plan. This option will provide you with an even wider range of benefits.
- Critical illness insurance may make sense for you, too.
Rather than focus entirely on cancer, this kind of insurance, provides supplemental coverage for other critical illnesses. Heart attack and stroke are the most common. Illnesses like kidney failure, major organ transplants, and even ALS are sometimes covered as well.
Aflac and other cancer insurance providers typically offer critical illness policies. This makes it relatively easy to purchase both types of coverage at the same time, if needed.
Critical illness insurance policies usually pay out a lump sum shortly after a diagnosis has been made. Like some of the cancer insurance policies, the payment can be used for medical or non-medical expenses.
Like cancer insurance, though, critical illness plans have their fair share of critics. Many say there are better ways for you to use your money to prepare for one or more of these illnesses.
- If you’re enrolled in Medicare, Medigap also could be an option.
Medigap is a supplemental insurance policy designed to work with Medicare. You have to be enrolled in Medicare to purchase a Medigap plan. If you're on Medicare, Medigap may be a better option for you than cancer insurance.
The reason: Medicare Part B covers 80 percent of most types of outpatient treatments. That will cover the lion's share of outpatient service for many types of cancer. Medigap can help you pick up the remaining 20 percent of the bill.
- You can’t rely on cancer insurance alone.
Before purchasing a cancer insurance plan, make sure your current health insurance is good enough. Cancer insurance is designed to supplement your primary plan. If your primary healthcare plan is poor, you're probably better off buying a buying better health insurance rather than adding cancer insurance.
- 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, but it’s unnecessary, too. Especially when your cancer insurance policy covers the same ground as your basic health plan.
Instead, find a cancer insurance policy that fills in the gaps t left open by your basic health plan. Carefully compare the benefits associated with your basic health insurance plan to any potential cancer insurance plans. Make sure there isn’t too much overlap between the two in terms of what is covered.
- 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 mentioned before, but it can’t be overstated. These plans and policies cover a wide range of costs and treatments and services. You can’t assume what is covered in one plan is also covered in another.
In fact, some only provide you with a single lump-sum payment. Also, some policies have waiting periods that force you to wait weeks and even months before your coverage kicks in. Others stop paying out after a certain period of time.
What Companies Offer Cancer Insurance?
Several insurance companies sell cancer-specific policies. These are the best cancer insurance companies:
What Types of Cancer Insurance Policies are Available?
Like other types of insurance, companies offer various types of policies. Let's review the best cancer insurance policy types:
- Lump-sum cash: When diagnosed with cancer, your insurer will pay a pre-determined cash sum. Use of funds is discretionary. Cigna's plan, for example, pays out between $5,000 to $100,000.
Lump-sums are helpful because benefits are more flexible. For example, United Healthcare's critical illness lump-sum pays for mortgages, groceries out-of-pocket medical costs, and more.
Be aware that you may need to pay taxes on your lump-sum benefits.
- Critical illness insurance: Many insurance companies sell critical illness plans that cover a variety of serious conditions, including cancer. Strokes, heart attacks, comas, and more all qualify as critical illness. Specific insurers have their own criteria, though cancer is virtually guaranteed to qualify as a critical illness.
Critical illness plans usually favor a lump-sum payout. Some plans may use a staggered payout. Others provide direct payment to health providers. These policies can help mitigate high out-of-pocket costs. Some policies pay for travel and housing costs if patients need to travel to specialists.
- Expense-incurred: Pays for a percentage of covered treatments. These policies usually come with a maximum dollar limit. Most expense-incurred plans require you to pay out-of-pocket, after which your insurer reimburses you. Some insurance companies deal directly with the healthcare provider.
- Indemnity policies: Similar to expense-incurred policies, except each individual treatment has payout limits. Aflac's indemnity plan, for example, pays a max of $300 per day for radiation and chemotherapy and $300 per day for hospital stays.
How Much Does Cancer Insurance Cost?
As a supplemental plan, many cancer insurance policies can cost between $10 to $50 per month. A Cadillac health plan will obviously cost you more. And again, a lump-sum plan with a $5,000 payout will be drastically cheaper than a plan with a $100,000 payout.
With so many different companies and plan types, it's difficult to guess how much a cancer insurance plan will cost you. Estimates become murkier when taking your personal factors into account. Fortunately, there are two steps you can take to get better rates.
First, compare quotes from different health insurance companies. Since each company has their own policy-types and pricing metrics, insurance premiums vary greatly. You need to compare different companies to find the ideal plan at the best price.
"It really is important to compare policies and to read the policy definitions carefully," says Slome.
Second, speak with an independent agent. "Since many people never read their insurance policy, we strongly advocate working with an insurance broker who is knowledgeable in the topic and is appointed with more than one insurance company," says Slome.
Healthcare is extremely complex, especially when it comes to extra coverage like cancer insurance. An independent agent helps you wade through the jargon and find the policy that suits you best.
Keep in mind -- the older you are, the more cancer insurance costs. Why? Cancer rates rise exponentially as you age – particularly around age 65. Insurers will ask you a few qualifying questions during screening:
- Have you been diagnosed with cancer?
- Have you been diagnosed with AIDS, HIV or ARC?
- Has a doctor advised you to undergo cancer tests?
If your answer is yes to any of those questions, you're unlikely to qualify for cancer insurance.
What Does Cancer Insurance Cover?
While coverage amounts vary, most cancer policies pay for the following:
- Blood transfusions
- Prescription drugs
- Ambulance rides
- Doctors' visits
- Hospital stays
More expensive plans may pay for additional benefits like outpatient treatment. These plans also feature less-strict waiting periods and coverage limits.
Lump sum plans are more flexible. Most don't restrict what you can spend the money on. You can spend it on mortgage payments, housing, transportation, groceries, or anything.
Cancer Insurance Limitations
There are several exclusions you should be aware of.
- Inpatient/outpatient: Expense-incurred plans may limit your outpatient treatment options. Many policies only pay for inpatient care.
- Cancer-related illness: People suffering from cancer are at risk of other diseases. But their cancer insurance plans may not cover those other illnesses. For example, people with lung cancer have an increased risk of catching pneumonia. But cancer insurance doesn't cover pneumonia.
- Dollar limits: Indemnity policies restrict payouts for specific expenditures. For example, a policy might only cover $2,000 in surgery costs or $5,000 in radiation. Your ideal limits will depend on your treatment needs.
- Time limits: You may have a 30 day or several months waiting period before your policy covers you.
- Renewals: Though some policies have guaranteed renewal, many don't.
How Much Coverage You Need
The American Association for Critical Illness Insurance recommends purchasing enough coverage to cover two years of mortgage payments. Your ideal coverage level depends entirely on your illness, your financial security, your current insurance plan, and your preferences.
For example, younger people pay considerably less than older people because cancer rates are significantly lower when you're younger. Additionally, if you have an excellent healthcare plan, you won't need as much coverage from a cancer insurance plan. Conversely, if you have a cheap plan with limited benefits, you might need a more extensive cancer insurance plan.
If you're purchasing a lump-sum plan, your payout should ideally cover your day-to-day expenses while paying for some of your medical care.
Ultimately, you should consult with an independent insurance agent. They can help you assess your needs and find the ideal plan. Since they're independent, they won't try to sell you on one specific plan. We can connect you with a health insurance agent to simplify your search.
Frequently Asked Questions
Q: Can I buy cancer insurance after being diagnosed with cancer?
A: Unfortunately, it doesn't work that way. You can't buy flood insurance if a hurricane is on the way. Cancer insurance is similar.
When applying for cancer insurance, your insurer will ask you a few questions. One of those questions is whether you currently have or have ever had cancer. If your answer is yes, you won't be eligible for the policy.
Q: Can I buy cancer insurance if I already have health insurance?
A: Yes. Cancer insurance is designed to work together with your regular health insurance plan. It is not a replacement for your primary healthcare.
Q: Do I need a medical exam to buy cancer insurance?
A: Other forms of health insurance may require a physical exam. But for cancer insurance, you only need to answer a handful of questions about your health and history.
Q: Is cancer insurance worth the cost?
A: Answering this question depends entirely on your personal details. Does your family rely on your income? Do you have adequate savings to deal with medical problems down the road?
What if you buy cancer insurance and never get cancer? Or what if you have been paying for cancer insurance for years, only to get ALS?
You can't predict the future. Cancer insurance will protect you from the unexpected, but it's no guarantee. It might be a great buy for some people – others, not so much. But it's relatively affordable, and you're paying for peace of mind.
If you're still curious whether cancer insurance is right for you, speak with an agent. They can help you assess your risks and explore plan options.
Q: What does cancer insurance pay for?
A: A variety of things. Some plans give you a lump-sum when you're diagnosed, and you can spend that money on anything. Other plans will give you specific amounts to pay for specific medical expenses like chemotherapy and doctor appointments. Some policies give specific amounts for non-medical expenses like housing, food, and transportation.
Remember, each plan is different. For example, one plan may pay for ambulance rides, while another plan won't. Always remember to read the fine print.
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