If you’re diagnosed with cancer, then it can be more than a little overwhelming at first. Everything in your life can either seem trivial or far more important now, which can help you assess what matters most to you.
Regardless of the situation, buying life insurance is a smart move, particularly because you want to provide for your loved ones. However, as you can imagine, navigating through life insurance for cancer patients can be challenging. Today we want to cover what to expect and what your options are for getting coverage.
Understanding Your Cancer Diagnosis
For people who haven’t dealt with cancer – either personally or through a loved one – it’s easy to assume that any diagnosis is serious. However, although many cases of cancer can be terminal, a lot of people can get treatment for the disease and make it to remission.
Thus, it’s imperative to get all of the facts before even thinking about life insurance. If you were recently diagnosed, don’t assume the worst – there are plenty of treatment options available.
Overall, having more information is preferable to having less. Not only can it help you cope with the reality of the situation, but it can help your insurer assess your level of risk. Buying life insurance with cancer isn’t necessarily impossible, but until you know all of the facts, it can be challenging.
How Cancer Can Affect Your Life Insurance
The fact is that cancer can develop and grow in various parts of the body. Breast, prostate, thyroid, skin – all of these are areas where you may get cancer and still be able to get coverage.
Localized vs. Metastasized
When talking with your doctor, you probably already know that you don’t want to hear the word “metastasized.” This means that the cancer has spread to a different part of the body from where it originated, which can make treatment far more problematic.
Not only can it be more difficult to remove the cancerous tissue, but it can also prevent you from getting life insurance. No matter where you go, insurers will assign a much higher risk factor to anyone whose cancer has spread around the body.
If it stays localized and your treatment is keeping it there, then you can often qualify for coverage. While you won’t be able to get Preferred options, it’s common to receive standard or substandard rates.
If you have nonmelanoma skin cancer, it’s low-risk enough that it may not even affect your insurance options at all. In most cases, as long as you’re treating the condition, you can still qualify for top-tier coverage.
On the other side, some types of cancer are deemed high-risk even if they don’t spread. For example, colon or cervical cancer can come back later on, and the damage they cause can impact your body forever. Be sure to talk to your insurance agent about the types of cancer that can limit your policy options, even if you’re already in remission.
Life Insurance After Cancer
For the most part, having cancer can reduce your life insurance choices no matter the circumstances (unless it’s nonmelanoma skin cancer). Thus, unless your diagnosis is terminal (more on that later), it may be better to wait until you’re in remission to find a policy.
In many instances, insurers won’t cover someone who was recently diagnosed or who is still undergoing treatment. Unless you show significant signs of improvement, you’re going to be considered too much of a risk.
Overall, the longer you are cancer-free, the more likely you are to get better coverage. Typically speaking, insurance companies look at the Surveillance, Epidemiology, and End Results (SEER) database offered by the National Cancer Institute for guidance on how to cover cancer survivors. All of this information is kept anonymous, but the data influence how policies are drafted and what kind of insurance survivors can get.
What If I Had Life Insurance Before I Got Cancer?
If you were covered and then were diagnosed with cancer, your policy should still be valid. Both term and whole life insurance pay death benefits due to cancer, so you shouldn’t have to worry. The only kind of coverage you wouldn’t qualify for is accidental death and dismemberment, as a cancer diagnosis doesn’t count as “accidental.”
That being said, when you got your policy can have an impact. For example, if you bought life insurance and were diagnosed with terminal cancer a year later, you may not be outside of the waiting period. Many policies have to mature after a couple of years (up to three or four), so if you die before then, your loved ones won’t get the full death benefit.
Also, if your insurer has reason to believe that you were dishonest during the application process, your coverage may be denied. The company has to prove fraud, so if you didn’t know about your cancer until after getting the policy, you shouldn’t have to worry.
Term vs. Whole Life Insurance
Although your policy won’t be terminated because of cancer, it’s imperative that you understand the limitations of your coverage and your options if you want to change it. Depending on the kind of plan you have – term or whole – it can impact your ability to make adjustments.
For the most part, if you have term life insurance and you want to extend the term, that shouldn’t be a problem, as long as the death benefit remains the same. If you want to increase the benefit, you will have to get more underwriting and potentially a medical exam, which means that it’s unlikely you will get approved.
Also, if you want to convert your term plan to a whole life insurance policy, you are likely able to do so without affecting the payout structure. Whole life insurance just means that it doesn’t expire as long as you pay the premiums, so your insurer shouldn’t have an issue with a conversion.
Life Insurance for Terminal Cancer Patients
As a rule, if you try to get life insurance after a terminal diagnosis, you will be denied no matter what. However, there are a couple of different options available to you if you want to make sure that your loved ones are financially stable after you’re gone.
First, you can buy a guaranteed whole life insurance policy. Second, you can try to get group life insurance through work. Let’s break down each option.
Guaranteed Whole Life Insurance
Typically speaking, this kind of coverage is offered to the elderly. In most cases, you can’t qualify if you’re not over 45. The reason that this policy is excellent for older people is that there is no need for a medical exam. As the name implies, the insurance is guaranteed for as long as you pay your premiums.
However, because of this guarantee, there are two significant catches with this kind of plan.
First, there are limited death benefits. These kinds of policies are usually designed to help pay for burial and funeral costs, which is why they are sometimes referred to as burial life insurance. In most instances, the cap will be $50,000.
Second, there is a mandatory waiting period. Not all life insurance has a waiting period, but guaranteed whole life plans do. Because they can extend for up to three years, these policies aren’t great if your diagnosis says you won’t be around that long.
Nonetheless, if these restrictions aren’t going to negate the whole process, guaranteed life insurance is usually the best way to go. However, group life insurance through your job can also be a decent option, depending on your circumstances.
Group Life Insurance
If your (or your spouse’s) employer offers group insurance, it’s worth it to take a look at the various elements to see how well it compares to guaranteed life insurance. Usually, these rates are higher than standard policies, but since they are based on age and not health, you can often get coverage regardless of your condition.
That being said, the death benefits are still capped, and your premiums will be relatively expensive. However, there shouldn’t be as long of a waiting period, which can make all the difference.
Be sure to talk to your employer thoroughly about the various components of these plans and what you can expect from it. Also, keep in mind that group insurance rates are shared by everyone who participates, which can lower the death benefit even more.
How to Prepare for Buying Life Insurance for Cancer Patients
- When were you diagnosed?
- What kind of cancer did you have?
- When did your treatment start? Are you still getting treated?
- Are you in remission? For how long?
- Do you have a family history of cancer?
- Have you had any relapses?
- Are you currently taking medication for cancer?
- How did your cancer affect Your lymph nodes?
Overall, the more information you can provide, the better off you’ll be. Insurance is all about assessing risk, so being able to answer these questions openly and honestly can lower your risk for insurers.
Be sure to talk to your doctor and get all documentation related to your case. Also, be prepared for a medical exam, as many insurance companies want to get a recent checkup. Documents can include pathology reports, treatment records, prescriptions, and other medical forms.
If you’re still undergoing long-term treatments for remission, be sure to stay on target and follow doctor’s orders. Even if you feel good, it’s better to show insurers that you’re still getting treated and showing progress. Missing an appointment can increase your level of risk.
Using Life Insurance to Pay for Cancer Treatment
It’s kind of ironic to think that you may have all of this money available to your loved ones once you’re gone, but you can’t touch it to help save your life.
Or can you?
There are several ways that you may be able to leverage your current life insurance policy to help pay for cancer treatment and medical bills. However, keep in mind that these tactics only work for plans already in place, so don’t assume that you can buy a policy and then cash in immediately.
Cash Value Life Insurance
If you have whole life insurance and you’ve been paying premiums for a while, then there is an inherent cash value to the policy already. That means you can either surrender (cancel) the plan and receive that value, or you can borrow against it with a loan.
Surrendering the plan is only suitable if your diagnosis is terminal. If you believe that you can get through it and get to remission, then you probably want to take out a loan so that your coverage is still in place should the worst happen.
The value of your policy depends on how long you’ve had it, as well as any restrictions placed by your insurance company. In some cases, you can incur a penalty for taking money out before 65, so be aware of that. Also, there are surrendering fees, so be sure to look those up if that’s what you want to do.
Life Insurance Settlement
For those who are terminally ill and don’t expect to live more than a year or so, selling your life insurance policy can be a smart move. The way it works is that the buyer takes over paying your premiums and assumes your death benefit after you pass. As you can imagine, the amount you get depends on the difference between the estimated costs of paying those premiums and the money that will be awarded.
For example, if you pay $250 per month, your death benefit is $100,000, and you don’t think you’ll be around for more than a year, the difference will be $97,000 ($100,000 – $250×12). The longer the buyer will have to pay premiums, the less you’ll get in the settlement.
Living Benefits Riders
Many life insurance policies have various riders that can be accessed while you’re still alive. In a lot of these cases, the rider may allow you to get the death benefit if you’re terminally or chronically ill.
Be sure to check with your insurance agent to see if any of these riders exist on your plan and what options you have to access them.