Fighting cancer with insurance

Cancer-specific policies cover all stages of the disease and are cheaper than critical illness plans

Increasing lifestyle disorders and burgeoning medical expenses make a cover for health-related issues very essential nowadays. This is specifically true for diseases such as cancer. Here, we throw light on cancer-related policies available in the market and what can be the best option for you.

Options available

To cover medical costs for cancer treatment (provided you do not suffer from it already), you can buy a cancer-specific policy from a life insurance company; you can also buy a critical illness (CI) policy where cancer is one of the 20-plus diseases that will be covered. Mediclaim policies are another alternative, but the premium will be significantly higher if you want a cover for higher sums such as ₹20/25 lakh, which you may incur in case of cancer. So the choice is actually between CI plans of general insurers and cancer plans of life insurance companies.

Edge over critical illness policies

In CI plans, the major shortcoming is that they cover cancers of only specified severity. Apollo Munich’s Optima Vital and Max Bupa’s CritiCare, for instance, do not pay out if it is carcinoma in situ (an early stage cancer).

Many life insurance companies offer benefit plans that cover only cancer. These are more comprehensive and relatively cheaper compared to CI plans.

There is, but, a lot of confusion around cancer-specific policies as these come from life insurance companies. Will these plans pay only on death? Is the term fixed or renewable life-long? Will the premium increase every year or is it fixed?

Regulations allow life insurance companies to revise the premium on their health policies (here cancer products) only in a block of three years. But most players in the market today give a fixed premium for five years on their cancer policy. This is unlike the CI plans of general insurers where the premium keeps changing every year.

The other advantage with cancer-specific policies over most CI plans is that they waive off premium once cancer is diagnosed in the early stage. In Max Life and ICICI Pru Life’s cancer policies, for instance, premium on the policy is waived off for the rest of the term, if cancer is diagnosed in the early stage.

When it comes to the term of coverage, in CI plans of general insurers, you get a life-long renewability. In cancer policies from life insurers, the policy term is fixed. But these plans too are trying to match up now with CI plans by offering a longer term coverage. HDFC Life’s Cancer Care, which was the first cancer plan in the market launched two years ago, is the only product with a shorter 20-year term now. Most other cancer-specific policies now give a 40-year term till a maximum age of 75 years. For example, ICICI Pru Life’s Cancer Protect and Max Life’s Cancer Insurance Plan offer a 40-year term (maturity at 75 years). In Future Generali’s Cancer Protect Plan, maturity is at age 80 years, and anyone of age 35 years, can get a cover for a term of 45 years under the plan.

As far as payouts are concerned, in cancer plans of life insurance players, the sum assured is paid in parts — about 20/25 per cent is paid out during the early stage of cancer and the balance when it reaches an advanced stage, says Santosh Agarwal, Head – Life Insurance, If there is death during the term of the policy after some portion of the payout has been made, the balance of the sum assured will be paid out to the nominee. In CI plans, however, almost all have a 28-day ‘survival period’ clause. Most insurers require that the policyholder survives at least 28 days from the time of claim to settle the sum insured.

In cancer-specific plans launched recently, some (PNB Met Life’s Mera Heart and Cancer Care is one) do not have the ‘survival’ clause. In most others, the mandatory survival period after diagnosis of cancer is five to seven days.

Who gets rejected?

You can buy a cancer-specific policy only if you have not suffered cancer or had any symptoms of it in the past. Those who had suffered cancer four years back might be considered by insurance companies, but individuals who have undergone cancer treatment in the immediate 48 months preceding the purchase of the policy, will be not taken in.

Some companies straight away reject individuals who have a family history of cancer, but some accept them. For instance, PNB Met Life’s Head, Products Management, Khalid Ahmad, says, “We do a physical underwriting of the proposals of individuals who come with a family history of cancer. We might ask them to undergo a medical test and then decide, but we do not reject them directly.”

Best plans

Among cancer policies issued by life insurers, Max Life’s Cancer Insurance Plan or ICICI Pru Heart/Cancer Protect are the best options now. Both of them are similar on most parameters. For a 35-year female, a policy under Max Life’s Cancer Insurance Plan, where the no-claim bonus benefit (goes up to 150 per cent of sum assured) is in-built in the policy, the premium works out to ₹11,753 for a ₹20 lakh policy for a 40-year term. If she wishes to take ICICI Pru Cancer Protect for the same amount and term, assuming she also opts for the no-claim benefit, the premium comes to ₹14,080.

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