Designing Cancer Plans

How Cancer Insurance Actually Works

Cancer insurance isn't like regular health insurance. It doesn't pay your doctor or hospital directly.

Instead, it pays you cash when you're diagnosed with covered cancers. You decide how to spend the money.

Two Main Types of Cancer Plans

Lump Sum Plans

These pay you one large amount after diagnosis. Typical benefits range from $5,000 to $50,000.

You get the full amount regardless of your treatment costs. If your treatment costs less than the benefit, you keep the difference.

Expense-Incurred Plans

These reimburse you for actual cancer-related expenses up to your benefit limit.

You submit receipts for treatment, travel, lodging, and other covered expenses. The plan pays you back.

What Cancers Are Covered?

Most plans cover all invasive cancers. But they define cancer differently, so read the details.

Built-in Waiting Periods

Cancer plans include waiting periods to prevent people from buying coverage after they know they have cancer.

Typical Waiting Periods

• 30 days: Coverage starts for accidents
• 12 months: Coverage starts for cancer (most common)
• 24 months: Coverage for pre-existing conditions (if covered at all)

Some plans have shorter waiting periods (6 months) but may cost more or have other restrictions.

Age and Health Requirements

Most cancer plans have age limits for new applicants. Common ranges are 18-75 or 18-85.

Many plans don't require medical exams or blood tests. You just answer health questions on the application.

Guaranteed Issue Options

Some plans accept everyone regardless of health status. These usually have:

• Lower benefit amounts
• Longer waiting periods
• Higher premiums

How Premiums Are Calculated

Cancer insurance premiums depend on several factors:

Age

Older applicants pay more because cancer risk increases with age. Premiums typically double every 10-15 years.

Benefit Amount

Higher benefits cost more. A $20,000 plan costs roughly twice as much as a $10,000 plan.

Gender

Women often pay slightly more due to breast and reproductive cancers. Men may pay more for certain plans due to higher lung cancer rates.

Tobacco Use

Smokers pay significantly more—sometimes 2-3 times the non-smoker rate.

Additional Benefits Often Included

Wellness Benefits

Many plans pay small amounts for preventive screenings like mammograms, colonoscopies, and PSA tests.

Typical payments: $50-$200 per screening, once per year.

Waiver of Premium

If you're diagnosed with cancer, the plan might waive future premiums while you're receiving treatment.

Return of Premium

Some plans return all or part of your premiums if you never file a claim. This feature increases the cost significantly.

Family vs Individual Coverage

Individual Plans

Cover only the person named on the policy. Cheaper but limited protection.

Family Plans

Cover spouse and dependent children under one policy. Cost more but provide broader protection.

Family plans often pay the full benefit if any covered family member is diagnosed.

Common Policy Exclusions

Cancer plans don't cover everything. Common exclusions include:

• Pre-existing cancers or symptoms
• Basal cell and squamous cell skin cancers
• Cancer caused by substance abuse
• Cancer related to HIV/AIDS
• Treatment received outside the U.S.

Renewal and Rate Increases

Most cancer plans are guaranteed renewable. The company can't cancel your coverage as long as you pay premiums.

But companies can raise rates for entire groups of policyholders. Increases typically happen every few years.

Important: Rate increases affect everyone with the same plan type, not just people who filed claims. Companies can't single you out for rate hikes.

Integration with Other Insurance

Cancer insurance works alongside your regular health coverage. It doesn't replace Medicare or employer insurance.

The cash benefit is paid regardless of what other insurance covers. You can use it for deductibles, copays, or anything else.

Tax Implications

Cancer insurance benefits are usually tax-free if you pay premiums with after-tax dollars.

If your employer pays the premiums, benefits might be taxable income. Check with a tax professional for your specific situation.

Choosing the Right Plan Design

Consider your current health coverage and financial situation. If you have good health insurance but worry about out-of-pocket costs, a cancer plan might help.

Look at the total cost over several years, not just the monthly premium. Factor in your age and likelihood of rate increases.

Most importantly, make sure you understand exactly what the plan covers and excludes before you buy.