All You Need To Know About Cancer Insurance

With privatization and burgeoning competition within the Life Insurance space, insurers have been steadily rolling out innovative products to address the needs of more niche segments of the market. One such product is Cancer Insurance.

Indeed, statistics related to Cancer in India are alarming. It’s estimated that 14.5 lakh people are struggling with the disease today, with over 7 lakh new cases being registered annually. According to government estimates, 5.56 lakh people are now dying of the dreaded illness each year.

Besides the risk of dying from Cancer, there are severe ramifications for survivors too. It’s likely that those who eventually do beat the disease will be engaged in a lengthy battle that will throw their careers and financial lives into an extended phase of turmoil. Treatment costs alone are estimated to lie between 5 lakhs and 20 lakhs for a period ranging from 6 months to a year, if not more.

“A person’s strong will power, positivity and advancements in technology have made the dreadful disease curable, but the cost of treatment is getting even more expensive, putting it out of reach for many people”, said ArijitBasu, MD & CEO of SBI Life. Notably, SBI Life recently launched a comprehensive Cancer Insurance plan called “Sampoorn Cancer Surakha”, to address this very gap.

Earlier this year, PNB Metlife had launched its “Mera Heart and Cancer Care Plan” on World Cancer Day in the month of February. Commenting during the launch of the product, Khalid Ahmad, Head – Products, PNB Metlife had said that an internal survey conducted by them had revealed that “61% of their client base had expressed the need for a product that covered Cancer and Heart Disease”

Some insurers are building cancer protection into their existing term plans, instead of launching new products. A case in point is IDBI Federal’sFlexi Term plan. “If a person has an insurance policy of Rs. 1 crore and the‘conversion rate’ for the cancer is 71%, the beneficiary would receive a lump sum amount of Rs.71 lakh on detection. For a higher sum assured of say, Rs. 2 crores, the policy would pay the beneficiary the lump sum of the same amount (Rs. 71 lakh) on detection of cancer, and will continue to provide life insurance coverage of Rs.1 crore too”, explained VighneshShahane, CEO, IDBI Federal.

How do Cancer Insurance plans usually work? As with all insurance policies, there’s a sum insured and a premium involved. Annual premiums for a 20-lakh sum insured range from 3,500 per year to 9,000 per year. The cost could be higher if you have a family history of the illness. For most insurers, the maximum Sum Insured amount is capped at Rs. 50 lakhs for standalone Cancer Insurance products.

Cancer Insurance policies lie somewhere between Health Insurance and Term Insurance in terms of the need that they fulfill. While Health Insurance policies indemnify an individual against medical costs only, term insurance plans cover an individual’s family financially, in case of the unfortunate demise of the breadwinner. Cancer Insurance policies, on the other hand, make a lump sum payout on the detection of the disease – building a cushion for the patient for the long and arduous journey ahead.

Features vary from product to product.  Typically, plans make different levels of pay outs depending upon the stage of the diagnosis (mild, moderate, or severe) as a percentage of the Sum Insured, whereas some provide you with the option to receive a monthly payout upon diagnosis, as a percentage of the sum insured, to cover for your loss of income. Still others have inbuilt ‘waiver of premium’ benefits that allow you to stop paying future premiums in the case of an unfortunate detection, while keeping the policy in force.  Most cancer insurance plans have their maximum ‘age atentry’ capped at 65 years of age. The multitude of features can get quite confusing for a lay investor, and it would be best to allow an unbiased and trustworthy Financial Planner (such as CFP) to do the groundwork for you. Stick with an insurer that has a high claim settlement ratio, and declare your family health history accurately (though it could result in a higher premium), to prevent issues from arising at the claims stage.

End Note: A simple health or critical illness policy will likely not cover your financial bases fully, if you unfortunately do contract the dreaded illness. If you have a family history of cancer, it would be a wise and responsible move on your part to take up a cancer insurance policy. Notably, the premiums you pay are deductible from your income under Section 80D as well.