Personal Finance

Case for holding a cancer policy

Yashish Dahiya | Updated on January 18, 2018 Published on July 31, 2016

It would be a good idea to have a critical illness and regular health cover as well



Even a casual mention of cancer sends shivers of fear through us.

Every year, India adds 10 lakh new cancer cases, of which only 30 per cent survive. This number is grim because of the lack of requisite technology as well as the exorbitant cost of treatment, which many can’t afford.

Insurance companies have realised this gap and have come up with insurance covers designed specially for cancer. Yes, there are critical illness insurance plans that cover cancer. But there are a few things that you probably did not know about this cover that renders it inadequate, thus making cancer cover a must in our health portfolios.

A critical illness plan covers cancer of a certain severity. It will not pay for any treatment if the disease has been diagnosed at an early stage. This is because the primary objective behind launching critical illness covers was to spare a policyholder from the worrying costs of treatment for several serious diseases. This concept also came into existence because studies have suggested that, in India, most people go to a hospital for treatment of a serious illness only after it has reached an advanced stage, which makes the treatment unaffordable. Hence, usually a critical illness cover offers to pay for diseases such as cancer only when they have been diagnosed in the advanced stages, that is, stage 3 or 4.

However, that doesn’t mean that the cost of treatment during early stage cancer is cheaper. At present, surgery in the initial stage can cost nearly ₹8 lakh. Cancer treatment on an average can cost up to ₹20 lakh depending on the type and stage of cancer. Doctor visits can cost a cancer patient nearly ₹20,000 every month. This, along with the wonder drug called Herceptin — which costs over ₹50,000 every month — can burn a hole in one’s pocket.

If you have been diagnosed with cancer at stage 2, you could spend over ₹3 lakh for radiology additionally. Mind you, these are all out-of-hospital medical costs, not usually covered under health insurance. In such a scenario, a cancer cover can really take away the burden of arranging funds for the treatment and you can fully focus on improving your health.

Continuation of policy

A critical illness policy usually ceases the moment you make a claim. But a cancer policy continues after the first claim that you may make on early diagnosis of cancer. For example, if you made a claim in the early stages of cancer, your insurer will pay a certain percentage of the cover and your cancer policy will continue normally.

If the cancer is controlled initially, but resurfaces after a few years, your policy will continue to cover it. In fact, if you are diagnosed with critical stage cancer, your insurer will pay a percentage of the sum assured over and above the total cover. Insurers such as Aegon Life and HDFC Life offer this benefit in their iCancer and CancerCare plan.

Say, you bought an iCancer plan coverage for ₹20 lakh. If you are diagnosed with cancer at early stage, you will receive 25 per cent of the total sum assured, that is, ₹5 lakh.

At a major stage, you will receive the full sum assured minus the payout for any previous claim. But if you are diagnosed with cancer at a critical stage as defined by the policy, you will get 150 per cent of the total cover.

However, in a critical illness policy, the insurer will pay you a lumpsum amount if you have been diagnosed with a serious disease and the policy then ceases.

Affordability

Thirdly, a cancer cover has lower premiums than what you would pay for a critical illness cover. The reason is obvious because a critical illness plan covers many more serious illnesses than just cancer. One must also remember that at present, the cost of treatment of any other serious ailment such as heart or kidney can be covered by your health insurance (they include hospitalisation costs), that is, if you have bought a sufficient health cover for yourself. However, the same logic doesn’t stand true in the case of cancer. The out-of-hospital costs are so high that they make cancer treatment unaffordable. Thus, in such a case, a separate cancer cover would be a wise idea as a ₹20 lakh cover, for instance, is available for anywhere between ₹1,000 and ₹4,500 for a 35-year-old male. On the other hand, a critical illness for the same policyholder will cost around ₹5,000, which can go up to ₹30,000 annually.

It is a good idea to have both a cancer cover (for your cancer needs) and critical illness plan (for any other serious ailments) in your insurance portfolio along with your regular health insurance.  After all, it is always better to be safe than sorry. 

The writer is co-founder & CEO, PolicyBazaar.com

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