What Is Cancer Insurance?

Many people who find themselves with financial issues — even bankruptcy — say medical expenses were a key factor in their struggles. The National Cancer Institute says the average cost of medical care can exceed $40,000 in the year following a cancer diagnosis. And that’s where cancer insurance comes in — a specialized type of health insurance designed to help cover expenses in case you’re diagnosed with cancer. That’s not something most people like to think about … but if you find yourself in a situation where you need it, cancer insurance could absolutely save your life.

Let’s look at the details of what cancer insurance is, how it works, what it covers, and whether it might be worth it for you.

What Is Cancer Insurance?

Cancer insurance is supplemental coverage that works hand-in-hand with your primary health insurance. Most basic healthcare plans don’t cover all the costs that go along with a cancer diagnosis, so cancer insurance is becoming a more common offering. It helps you pay for cancer-related expenses, which can be extremely high. Plans often cover both medical and non-medical costs, and sometimes literally anything you want to spend your money on.

Since cancer insurance acts as a supplemental add-on, it requires you to have basic health insurance first. Under the Affordable Care Act (ACA or Obamacare), you can’t be denied health insurance for a pre-existing condition, including cancer. However, you can be denied cancer insurance if you already have (or previously had) cancer. And some policies have a waiting period before benefits start. So the best course of action is to have both in place while you’re still healthy.

How Do Cancer Insurance Policies Work?

Cancer insurance is available in several plan types, and they each work in a different way. So it’s important to figure out which would be the best option for you if the unthinkable occurred.

Here are the three main types:

• Expense-incurred policies pay for a certain percentage of treatment costs up to a specified maximum
• Indemnity policies have a fixed limit for each type of treatment covered
• Lump-sum cash benefit policies pay out a predetermined cash amount that you can spend how you want

Lump-sum plans generally have the highest premiums because they pay the policyholder directly, with few restrictions. The others make payments to the provider for approved procedures, just like regular health insurance. All of them require a cancer diagnosis from a doctor before you can start using the benefits.

What Does Cancer Insurance Cover?

Some policies are based on specific types of cancer and specific categories of expenses. Others provide coverage for non-medical expenses like childcare or hotel stays during treatment. Some also cover annual cancer screenings before any potential diagnosis. And lump-sum plans usually don’t restrict how you use the funds, but you need a diagnosis before you get them.

Covered expenses may include:

• Co-pays and deductibles
• Doctor appointments
• Prescription medications
• X-rays and lab tests
• Radiation or chemotherapy treatments
• Experimental treatments
• Blood transfusions
• Surgeries
• Hospital or hotel stays
• Transportation to appointments
• Household expenses and utility bills
• Childcare

You can often customize your coverage level by choosing different plan options. Cancer insurance may only pay out if you get a cancer diagnosis, but critical illness insurance usually includes heart attack and stroke as well as cancer. Cancer recurrence benefits cover you if you get another cancer diagnosis after being in remission. Supplemental hospital insurance can be combined with any of these to cover additional hospital expenses like ambulances, ER visits, X-rays and blood tests.

Cancer Insurance vs Health Insurance

So what’s the difference between standard health insurance and supplemental cancer insurance? Many of the things we’ve talked about, which cancer insurance often pays for, are not usually covered by your standard health insurance.

Health insurance will pay for many aspects of cancer treatment, including chemotherapy, radiation, surgeries and other non-experimental treatments. But it doesn’t pay for anything experimental, and it won’t likely cover the whole bill. There are usually co-pays due at each appointment, and deductibles that you need to pay out of pocket before the insurance kicks in.

Health insurance also won’t pay for non-medical expenses related to your treatment, like transportation, lodging, hotel stays, childcare, or household expenses. But cancer insurance can be used to cover all of these things.

Is Cancer Insurance Worth It for You?

Like any insurance, the value really becomes most obvious if you have to use it. But cancer insurance can definitely bring you peace of mind — which on its own could reduce your risk of getting sick just by removing some stress from your life.

Over 40% of us will be diagnosed with some type of cancer during our lifetimes, according to the National Cancer Institute. If you have additional risk factors, like a family history of cancer or certain lifestyle habits, the chance of developing the disease goes up. So you’re much more likely to need cancer insurance than to make a claim on, for example, your car insurance or homeowners insurance.

A cancer diagnosis comes with physical, emotional and financial obstacles. Making a claim on your cancer insurance means you have the support you need to focus on your recovery. Then you can begin healing instead of worrying.

But in order to figure out whether cancer insurance is worth it for you, it’s best to take a look at your personal circumstances. If you’re more likely to get cancer, or more likely to have financial hardship if you do, it’s definitely something to take a look at.

Reasons to consider cancer insurance:

• Elevated risk due to age, lifestyle, or family history
• Low tolerance for dealing with the unexpected
• High deductible on your health insurance
• Limited emergency funds available for expenses

If you find yourself unfortunately diagnosed with cancer and don’t have cancer insurance already, you may be able to apply for a grant or other financial aid through a non-profit organization. Some offer services to patients with many types of cancer, like CancerCare or the HealthWell Foundation, while others focus on specific cancers, like the Leukemia & Lymphoma Society (LLS).

Bottom Line

Cancer insurance might not be the first type of insurance you think about, but it’s extremely important if you do end up needing it. Cancer is very expensive and intensive to treat, and it can take a toll on you in many ways. The one part you can control is its financial impact — and cancer insurance can help you do that.

If you bundle it into a complete critical illness plan, you can rest assured that you’re covered for the most common life-threatening medical incidents. Cancer, heart attacks and strokes have devastating effects on people every day. So it’s definitely something to consider before an emergency strikes.

But plans and premiums can vary drastically, so be sure to shop around for the coverage you want at a price you can afford. That way there are no surprises if you ever have to make a claim.