Do you really need cancer insurance?

Mary Lou Jay

After the initial shock of a cancer diagnosis has worn off, you may ask yourself, "How are we going to afford treatment and pay all our bills?"

A 2006 survey conducted by USA Today, the Kaiser Family Foundation and the Harvard School of Public Health found that one-fourth of families affected by cancer used all or most of their savings when a family member was diagnosed with cancer.

Some buy cancer insurance hoping to avoid this financial squeeze. There are two general types of cancer insurance. Some policies function like typical medical insurance, paying a set amount or percentage of costs for a procedure, a hospital stay or some part of a treatment.

Other cancer insurance policies pay a pre-determined lump sum when a covered person is diagnosed with cancer. This lump-sum payment can help pay for daily living expenses, transportation to and from appointments, lodging and even experimental treatments, according to Aflac, which provides a lump-sum cancer insurance policy. It even can be used for monthly bills and health insurance deductibles, and as replacement for lost wages.

But groups like the National Association of Insurance Commissioners (NAIC) advise consumers to consider all their options carefully before purchasing a cancer insurance policy. Many may not need it.

Despite the scary numbers about cancer, it actually accounts for only 10 percent of all health expenses in the United States, according to NAIC. So instead of focusing on cancer insurance, you may be better off spending the money to buy comprehensive coverage that will help pay not only for treating cancer treatment but for treating many other types of illnesses.

A cancer insurance policy might not provide many benefits if you already have comprehensive medical coverage. Most cancer insurance policies have "coordination of benefits" clauses, according to NAIC, so they won't pay for expenses already covered by another policy. There may be limitations, too, on how much the policy will pay toward each treatment. Plus, cancer insurance usually pays only for expenses directly related to cancer treatment. If you get an infection while you're fighting cancer, the expenses for treating that infection usually won't be covered, according to NAIC.

Are you paying for medical treatment through Medicare? You're probably better off buying a Medicare supplemental insurance policy instead of cancer insurance, NAIC says. Covered by Medicaid? You shouldn't need any other insurance.

If you're considering cancer insurance, be sure you understand their limitations on pre-existing conditions. Any cancer diagnosed before the policy takes effect usually will not be covered; some policies even deny coverage for cancer that you had -- but didn't know you had -- before you made the purchase. Most cancer policies also have waiting periods of at least 30 days before you're eligible for benefits.

The thought of you or a loved one getting cancer is frightening. But before you spend money on a cancer insurance policy, take time to review your current medical coverage and get health insurance that protects you financially not only against cancer, but against other types of illness as well.