Life insurance for cancer patients
Life insurance approval and cost are generally based on your age and health. The younger and healthier you are, the lower the premiums. Most applications ask questions related to your health and your family history, and fully underwritten policies will require a medical exam. Depending on your answers and what the exam finds, you may be subject to higher rates or even be denied coverage.
If you do have a medical issue such as cancer, certain policies might be difficult or even impossible to get. You still have options. There are a variety of life insurance policies available such as guaranteed issue, group life and burial insurance.
Certain types of cancer are considered low-risk, and insurance companies are more likely to offer coverage if you have them. One example is non-melanoma skin cancer. More complex or later-stage cancers are considered a higher risk to insure.
“Some companies look and put you into a lower or higher class and adjust for your insurability,” says Dennis Molinari of Molinari Insurance Agency in Shrewsbury, MA.
You may be tempted not to tell the insurance company about your cancer for fear of being denied or being charged high rates. It is imperative to understand that if you lie on an insurance application, claims could be denied in the future. This means your beneficiary could get nothing if you die.
As for a policy you may already have? “If you already have life insurance, it can’t be taken away,” Molinari says. “If you didn’t have cancer at the time, you’re all set– just as long as you continue paying the premium.”
This is extremely important to remember– a whole life policy follows you for your whole life and if you obtained it when you were young and healthy it’s yours if you don’t let it lapse from non-payment. “Once they issue your policy, they’re locked in,” says Molinari.
He stresses the importance of young families planning for their futures as early as possible as rates only increase as you get older and health issues arise.
What type of life insurance can you get if you have cancer?
Following are a few of the best kinds of life insurance for people who have cancer. They are all examples of no-exam life insurance. The first kind, guaranteed issue life, is likely the only option for people with terminal cancer, but may not pay out due to a two-year waiting period on coverage.
Guaranteed issue life
“A few companies will issue policies without any medical underwriting,” Molinari says. “You may see these advertised on TV as guaranteed policies– you pay $9.95 a month for $10,000 of coverage, guaranteed. But in the first two years, they don’t pay any claims. When they have that many people getting policies, the companies have to find a way to adjust to make a profit.”
Guaranteed issue life insurance does not require a medical exam and promises coverage for everyone. The trade-off is that they do not have very high payouts, often no more than $25,000. There is also a waiting period for payouts as Molinari mentioned. That means if you pass away before the waiting period is up, the beneficiary will not get the death benefit payout. In some cases the insurance company pays your beneficiary whatever premiums were paid so far, but not the full death benefit.
Still, this is a good option for a lot of people. It can also be used in conjunction with other types of insurance.
Guaranteed issue life is the only real option for people facing a terminal illness; however, it’s important to consider the two-year waiting period and understand that your beneficiary may receive nothing if you die within that time.
Simplified issue life
This type of life insurance has a short application with no medical exam required, so you are more apt to get approved. Simplified issue life insurance also has higher premiums and low payouts as a trade-off. This is a good option for people after they have had cancer.
You will still need to answer medical questions to qualify for this type of policy. Whether or not you will be approved with a current or previous cancer diagnosis depends on the company. You can expect to pay higher premiums for this type of policy.
Group life
Another type of insurance for people with cancer is group life. This is insurance you get through work. Group life is often easier to get as it usually doesn’t require a medical exam; you’re automatically approved. In many cases, your employer offers one or two times your salary in life insurance as a benefit without you even having to fill out an application. You can also often buy additional coverage without the need to qualify and pay for it in pre-tax paycheck deductions.
One drawback of this type of insurance is that you usually can’t take it with you when you leave your job.
Final expense or burial insurance
Final expense insurance pays out a death benefit intended to cover your funeral and burial costs to take the financial burden off your family members. Funerals can be very expensive, so this is a great way to plan ahead. This is a good type of insurance for people with cancer as it’s usually a guaranteed-issue policy that doesn’t require a medical exam. Some policies may have health questions, however.
“Burial insurance is still considered a type of life insurance,” Molinari says. “It’s usually a flat amount, $10,000 or $15,000. You might arrange to have the policy go directly to the funeral home.”
Some policies, called pre-need, allow you to plan your funeral in advance and have payment sent directly to the funeral home.
What if my cancer is in remission?
Typically if you’ve been in remission for five years, it’s easier to get life insurance. You may be approved more easily for a more traditional term or whole-life policy and rates may be slightly lower.
There are longer waiting periods if you had Stage III or IV cancer, however– sometimes the insurance companies want to see ten years of remission before they will approve you for a regular life insurance policy.
Insurance companies have underwriting guidelines that determine how many years you have to wait, depending on what kind of cancer you had. For instance, prostate cancer may have only a one-year waiting period while leukemia has a ten-year wait.
The longer you are from your cancer diagnosis and treatment with no recurrence, the easier and cheaper it is to get life insurance.
Does a family history of cancer affect life insurance?
If someone in your family had cancer, it may affect your rates. You should still, however, be able to get life insurance.
The questions on life insurance applications are about your own health as well as close family members. You are asked if your parents and siblings are still living and if not, how they died and how old they were when they died. If cancer was the reason for their death, there might be follow-up questions about the type of cancer.
Certain types of cancer have a strong genetic component, others do not.
The same goes for other medical conditions such as cardiovascular disease. If you do not have a cardiac condition but your mother or father did or does, the insurance company might weigh this into their decision-making and factor it into your rates. Your rates can be affected by close family members with cancer.
Life insurance with cancer: The bottom line
We all want options when planning our financial future, and life insurance is a great way to do that. Thankfully it is available to everyone, even if you’re dealing with cancer. However, you should be prepared to see fewer options and higher rates.
The best way to secure your family’s financial future is to apply for life insurance when you are young and healthy before a cancer diagnosis can make it difficult to get coverage.
