Personal Finance

What you should know about cancer insurance policies

Sai Prabhakar Yadavalli |BL Research Bureau | Updated on: Apr 23, 2022

People with family history of the deadly disease must consider being insured for cancer, apart from a general life cover

Financial risk from cancer can be potentially high as components of risk, probability of the event occurring and impact cost from the event are on the higher side. A report from National Institute of Cancer Prevention and Research states that the risk of developing cancer before the age of 75 stands at 9.81 per cent for males and 9.42 per cent for females, with a yearly incidence rate at 0.08 per cent for the Indian population. This translates to roughly one-in-10 chance of hearing the dreaded diagnosis in one’s lifetime. The cause of cancer is still a study under progress ranging from lifestyle, genetics, hereditary and stress.

But the disease treatment has evolved significantly. On the pharmaceutical end, drug conjugates, gene therapies and several antibodies are competing to be an effective solution, while medical technologies are being developed to detect, mark, and operate on zones previously out of reach for surgeons. But being in the first generation of solutions, a developing country like India may not be able access these solutions on a mass-manufactured scale yet. This implies availability of cancer treatment, but at an exorbitant cost; this points to high cost of impact from an event with a (medically) high incidence rate.

Insurance options

Availability of cancer insurance, a distinct kind of health insurance, addresses the risk posed by the disease. It can be a useful product, especially for those with a family history of cancer, stressful environment or lifestyle. The two main crucial differences from health insurance are provision of a lump-sum benefit and economical cost of the cover for cancer insurance.

Cancer insurance can provide a sum insured of ₹25 lakh at an annual premium of around ₹2,000 for a 30-year-old and a ₹ 1 crore cover at ₹7,500-8,000. The low cost of premium for the high scope of the sum insured is ideal for treating cancer which needs advanced professionals and cutting-edge scientific solutions. A regular health insurance of ₹5-lakh cover would incur premium of around ₹9,000 per annum. The sum insured is paid as a lump-sum on diagnosis, which allows one to use it for treatment in an unrestricted manner or supplement loss of earnings of the primary bread winner. Cancer affliction extends to productivity of the individual, which is when a lump-sum payout on diagnosis works out for the policyholder. For instance, on early-stage diagnosis 25-50 per cent is paid out and major stage the remaining part of the sum insured is paid out. Care Health’s cancer insurance, on the other hand, is an indemnity based (payout based on expense incurred) product. These policies also involve a No Claim bonus with doubling of the sum insured on claim-free period (for a period ranging from three to 10 years).

Take note
Availability of cancer insurance, a distinct kind of health insurance, addresses the risk posed by the disease. It can be a useful product, especially for those with a family history, stressful environment, or lifestyle

Some policies also offer income benefits and waiver of premiums. On a claim being processed, future premiums are waived off. Some policies offer an income equivalent to 1 per cent of sum assured paid monthly as well.

These insurers cover pre-existing diseases (PED) with a four-year waiting period. But a pilot product launched from Star Health Insurance provides cancer insurance to people who have earlier been diagnosed with cancer. The first such policy provides lump-sum payout of 50 per cent of sum insured for recurrence, metastasis, and a second malignancy unrelated to first cancer. Indemnity cover is also available for other procedures but have a four-year waiting period. Also, being a pilot product and considering the high risk, the product features with a low sum insured of either ₹3 lakh – ₹5 lakh which come with an annual premium of ₹21,000 to ₹32,922 and 10 per cent co-pay condition (payout only on 10 per cent payment by the policyholder). A recourse to patients with cancer (stage 1 or stage 2) is a highly distinguishing feature and the premium reflects the high risk of recurrence prevalent with the disease, which can be borne to an extent by the insurer.

The policies are available to an age bracket (depending on the product) from ages of 1-70 years of age generally. These policies are indemnity-based and hence will not involve any maturity, surrender or even death benefit. If diagnosed with any form of cancer, the payout will involve a survival period of seven days before the claim can be processed.

Regular or critical illness insurance

Either a feature or a product, cancer insurance addresses only cancer-related diagnosis, which is why regular health insurance for other ailments is critical, with an added protection from cancer cover. Building up an adequate sum insured for cancer protection in regular health insurance may prove expensive. The grind involved with claim processing being an additional hurdle subjected to sub-limits on disease coverage, procedures approved and service levels with regular health insurance. Cancer insurance also tactfully addresses earnings potential of the policyholder with lump-sum payments, doubling up as life insurance product within health insurance. 

Critical illness insurance similarly provides lump-sum payout on diagnosis and cover cancer amongst their list of 20-50 pre-defined conditions. The wider band of disease coverage accounts for the near doubling of premium charges in critical illness insurance plans (₹5,500 for a 30-year-old male for a ₹25 lakh cover). The wider pre-defined list of covered ailments covering all forms and definitions of cancer (leukaemia, lymphoma, sarcoma, and auto-immune disorders, for instance) and the (marginally) higher pricing seem to the key differences between cancer-specific and critical illness insurance products.

Published on April 23, 2022
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