February 4th is World Cancer Day, and it reminds us that cancer is one of the biggest killers in the world. More than 8 lakh people died due to cancer in India in 2022. While these numbers sound morbid and doctors encourage a balanced lifestyle to reduce the chances of incidence of cancer, the good news is that insurance plans provide cover for cancer.
Both health and life insurance plans cover cancer: "Both health insurance plans and term insurance plans with riders offer different types of protection, and it's best to assess your specific needs and budget before choosing the right option," says Venkatesh Naidu, CEO - Bajaj Capital Insurance Broking.
He says that health Insurance plans specifically cover medical expenses related to treating illnesses, including cancer. These plans can help you cover the costs of hospitalization, surgeries, and other medical treatments related to cancer. On the other hand, term insurance plans with riders provide financial protection in the event of death or critical illness such as cancer. If you are diagnosed with cancer, you may be eligible to receive a lump sum benefit under a term insurance plan with a critical illness rider. This benefit can help you manage expenses related to your cancer treatment and other financial obligations you may have.
Choosing the right health insurance for cancer: In India, health insurance policies typically cover hospitalization expenses related to cancer treatment. "However, these policies might not be able to pay for all cancer-related costs, which can total a substantial amount. This can either be because of a policy limitation issue or a sum insured issue, depending on the insurance policy held by the patient," says Ankur Nijhawan, CEO of AXA France vie India reinsurance branch.
So, he suggests that in addition to purchasing health insurance, one can add cancer coverage insurance at a top-up premium rate to an existing policy for a more cost-effective option than a stand-alone cancer policy which can have high premium costs.
For example, a typical health insurance plan may cover the costs of hospitalization, surgeries, radiation therapy, and other medical treatments related to cancer. "However, it's important to carefully review the policy terms and conditions, including the list of covered treatments and exclusions, before purchasing a health insurance plan. Some health insurance plans may have limitations or exclusions for certain cancer treatments, and some pre-existing conditions may not be covered immediately," says Naidu. Hence, it is also important to consider the sum insured, the maximum amount the insurance company will pay for your medical expenses in a policy year. Choosing a health insurance plan with a higher sum insured will help ensure that you have adequate financial protection in the event of a cancer diagnosis.
Things to note: In India, where insurance coverage is often limited, cancer patients end up paying up to 60 per cent of their medical costs out-of-pocket, occasionally forcing them to sell their assets or even incur debt. "It is advised to select specific cancer insurance plans that provide more comprehensive coverage specifically for the illness's treatment. Insurances often have a pre-set list of exclusions in their policy. Hence, it is important that the policyholder studies the exclusions carefully before buying a policy," says Nijhawan.
It is important to estimate payout at different stages: cancer insurance covers all cancer stages, including the early stage/minor stage and the major/critical stage. "An insured person diagnosed with CIS (Carcinoma in situ) at an early or minor stage gets 20 per cent, or 25 per cent payout depending upon the insurer to insurer, whereas diagnoses at the major/critical stage call for a 100 per cent payout. However, in certain plans, the payout is even 150 per cent," says Naidu.
If you already have cancer, check if the health insurance plan covers pre-existing conditions and if there are any waiting periods for coverage.