Can You Insure Yourself Against Cancer?

Last updated August 5th, 2020

Reviewed by Frank Lalli

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An estimated 1.7 million new cases of cancer were diagnosed in 2019 in the United States. Here’s a look at how you can be prepared for the financial toll that can come with expensive, life-saving treatments — even hospice care.

Should You Get Major Medical Insurance?

It’s best to anchor your healthcare around comprehensive major medical insurance. Nothing can match insurance to pay for cancer better than major medical insurance – whether you sign up at work or purchase it on your own through the Affordable Care Act (ACA) also known as Obamacare. By law, ACA-compliant plans must offer you the 10 essential health benefits, and they must accept you despite any pre-existing health conditions or your family history. Plus, these plans come with annual out-of-pocket spending caps and have no lifetime or annual limits on what they payout

You generally have to join your major medical plan during the annual Open Enrollment Period at the end of the calendar year. Don’t miss that window! Also, note that your employer may offer its plans during a different enrollment time.

What Is Cancer Insurance?

Several health insurance companies offer plans specifically for cancer. This cancer insurance is supplemental fixed indemnity insurance that specifically helps pay for a portion of cancer treatment. You may also be able to find a broader critical illness policy that helps pay for cancer and other specific types of chronic illnesses.

These narrow types of supplemental insurance generally cost from $10 to $100 a month, depending on your age and other factors. Some pay a lump sum of anywhere from $5,000 to $100,000 when you are diagnosed. Others pay a percentage of your treatment bills.

Cancer insurance policies are offered by insurance companies such as Aflac and Swiss Re. Keep in mind that these policies are medically underwritten, meaning that you must be cancer-free and in decent health to be accepted. You will not qualify to sign up after you develop cancer.

Always read the details closely before signing up. Some cancer insurance plans don’t cover every type of cancer. Many don’t cover skin cancer, for example, a leading type. Also, they don’t cover outpatient treatment at all. Also, payouts are limited to set amounts no matter how much your treatment may cost — or only up to a certain percentage of your bills. And as you age, and your health risks increase, you may well be dropped.

What Is Disability Income Insurance?

Many insurance companies offer disability income insurance that commonly pays you half of your salary if you can’t work for a period of time because of a serious illness, including cancer.  These plans generally send you checks (or “pay out”) when a serious illness causes you to miss work for an extended period.

However, many disability insurers do not accept people with preexisting conditions, or enroll the applicant but do not cover that person’s condition. So unless you are in perfect health, check the plan very carefully before signing up.

There are two kinds of disability insurance: short-term, which replaces a portion of your paychecks for three to six months; and long-term, which covers you for many years. Sometimes these plans, especially short-term, are provided and paid for by an employer. But even if you must pay on your own, many experts say it can be worth the considerable cost of 1% to 3% of your salary.

If you do get very ill, a plan’s financial support can get you through a difficult time by covering your missing paychecks.

What Is Life Insurance with Living Benefits?

Another potential way to protect against the high cost of a cancer diagnosis is to sign up for a life insurance policy with a living benefit rider. This type of life insurance allows you to tap a portion of your death benefit once in a lifetime if, for example, you develop an expensive health condition.

A 45 year old can get a $1 million life insurance policy with a living benefit for under $40 per month. Normally, life insurance policies only pay out once — in full after death. But with a living benefit, you have the option of tapping roughly 30% to 50% of the face value one time before you die.

After the living benefit is paid out, the insurer will still pay the policy’s remaining benefit amount to your beneficiaries when you die. So, if you take a 50% living benefit, your family will still receive the remaining half.

Once you take the living benefit, the insurer will often update your policy to reflect the remaining death benefit. The updated revised policy stays in effect until you die, as long as you continue to pay premiums. Plus, the payments will be adjusted to reflect the lower death benefit.

Does Short-Term Insurance Cover Cancer?

Short-term health insurance is not a good way to insure against cancer, though a plan can cover your bills for a limited time. However, once you are diagnosed with cancer, your short-term insurer will not renew your plan. Even before that bad news, unlike ACA major medical insurance, short-term insurers can reject you based on your medical condition or family history, and sometimes argue that your cancer was the result of an undiagnosed condition and refuse to pay.

Some temporary plans will cover your hospital bills from the time you are diagnosed in the hospital until you are discharged. But shortly after that, you will be dropped.

What Can Be Your Best Protection from Cancer?

The overriding advice about cancer is to always get your regular screenings. The earlier the detection, the more effective cancer treatments can be.

Some of the most common cancer screenings are for breast, cervical, colorectal (colon), and lung cancers. Cervical cancer screenings for women can start at age 21, while most other cancer screenings begin at around age 45.

If you have a family history of cancer, it makes sense to take action to catch the disease early and to be financially prepared to fight any bad news. Begin by asking your doctor about getting screened earlier than the general public. When it comes to cancer, there’s no substitute for early attention and financial protection to give you peace of mind.

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