Is cancer insurance worth it?

A cancer diagnosis can be terrifying, and you might have a lot of questions: What kind of treatment will I need? What are my odds? What will take care of my family? But one of the biggest questions for most Americans is often: Can I afford the care I need if I’m diagnosed with cancer?

Anyone could be at risk, though your chances increase with age and certain behaviors, like smoking or family history of cancer. As your risk increases, so does your chance of financial hardship due to cancer.

For many, those costs could be financially devastating and could cause some to forgo treatment altogether. Cancer insurance or critical illness insurance may help you manage some of those expenses, but is cancer insurance worth it? Below are some of the important features and benefits of cancer insurance.

What is cancer insurance?

Cancer insurance is meant to help you reduce your out-of-pocket costs for cancer treatment after a diagnosis. It does not replace your primary health insurance, but it can be used to supplement those policies, as well as help you with lost income if you have to take time off work for treatment, living expenses, or paying off debts.

Types of cancer insurance

There are three main types of cancer insurance policies:

• Expense-incurred policy: Pays a percentage of treatment costs up to a set limit
• Indemnity policy: Pays a fixed sum for each treatment covered by the policy
• Lump-sum policy: Pays a set cash benefit for medical expenses related to treating cancer

Indemnity and expense-incurred policies often have deductibles, copays and other requirements, while lump-sum policies typically pay you directly and let you decide how to use the funds. Some policies also have waiting periods before you can file a claim that could be as much as 90 days or have limits on how many years they’ll pay out for cancer treatment.

What’s covered?

Coverage can vary by policy, but most cancer insurance policies cover things like doctor visits, radiation or chemotherapy, lab tests, hospital stays, and surgery. Others go further to cover personal or non-medical expenses like transportation, childcare, household bills, and experimental treatments.

Some policies restrict the types of cancer they cover — for example, many cancer insurance policies do not cover common cancers like non-melanoma skin cancer. Others won’t offer coverage if you’ve had cancer in the past or were diagnosed before you applied for the policy.

Benefits of cancer insurance

One of the biggest benefits of cancer insurance is having the financial peace of mind you need to be able to better focus on your health and recovery.

Affordable premiums

Most people find that cancer insurance premiums are generally affordable — though your premiums might be higher based on your risk factors. If you’re worried that you’re at an increased risk of cancer, spending the extra premium amount each month might be worth it to avoid higher costs down the road.

Covers out-of-pocket costs for cancer treatment

Cancer insurance may help fill the gap between what you owe and what your basic health plan will cover, as well as expenses you haven’t considered, like travel and lodging expenses if you have to seek care far from home or dietary assistance during chemo treatments.

Provides lump sum payment

Some policies offer a lump sum payment after you’ve been diagnosed, so you get the money up front and can use it when or how is most helpful to you. While many patients like the flexibility of a lump-sum payment, keep in mind that if your medical costs are higher than expected, you might still end up with out-of-pocket for cancer treatment if the insurance payout doesn’t cover everything.

Who should consider cancer insurance?

Having cancer insurance is like having any other insurance: You buy a policy so if something happens, you’re prepared. You have to weigh your cancer risks with the cost of the policy and your financial situation. For example, you might want to consider buying cancer insurance if:

• You have a family history of cancer. That means your risk of cancer may be elevated. 
• Your primary insurance has out-of-pocket costs. Cancer insurance could help cover some of the steep out-of-pocket costs associated with high-deductible plans or plans with high maximum out-of-pocket limits.
• You’re worried about rising cancer rates. The National Cancer Institute estimates that 38.9% of men and women will be diagnosed with cancer during their lifetime Opens in New Window.‍ ‍ If you have other risk factors, your odds may be even higher.

Know your health history and risk factors

If you are young, healthy, live a low-risk lifestyle, and don’t have a family history of cancer, you might not need cancer insurance, though nothing is guaranteed. However, if several close relatives have been treated for cancer, a cancer insurance policy might make more sense. Other risk factors include age, smoking, drinking alcohol, an unhealthy diet, exposure to certain chemicals or other substances, or overexposure to sunlight or UV lights.

What about my primary health insurance?

It’s possible that your current primary health insurance policy could be enough for you, especially if you feel you’re at a low risk for developing cancer. Most health policies include some coverage for diagnostic tests and treatments for cancer, though there may be expenses your policy won’t cover, or won’t cover completely. You also may be able to add a rider to your primary health policy to increase your critical illness coverage, which could help with cancer-related expenses.

Is cancer insurance right for you?

Only you can decide if your risk factors are worth the cost of cancer insurance — is paying for insurance you might never need a waste of money? Can you afford adding the expense of a monthly cancer insurance premium to your budget? 

Keep in mind that it’s possible you’ll pay for cancer insurance but develop a cancer that isn’t covered, like skin cancer. There may be scenarios where it makes more sense to take the money you would’ve spent on a cancer insurance policy and use it to build up your emergency fund or purchase another form of insurance that can help manage your risk. That’s why it’s important to weigh the benefits of cancer insurance, assess your risk factors, and research any policy you’re considering to be sure it meets your health and financial needs.