Cancer insurance is a type of supplemental insurance policy you can buy to help cover the out-of-pocket costs for specific treatments and related expenses and to replace some of your lost income. But is this really a good investment?

Cancer Insurance: Buyer Beware

"You have to be very careful of any type of insurance that's specialized in nature," says David Randall, CFP with LPL Financial. "When you buy such a policy, you are trying to defer the risk, taking it from yourself and putting it on the insurer." While the concept sounds good, the problem is that it doesn't always work the way you expect.

He points out that there are a range of variables depending on the type of insurance you're considering and the company that issues it. In some cases, you might not even qualify for such a plan if you have a family history of cancer or other health problems.

In other cases, you may pass the criteria and be issued a policy, only to find out later after paying years of premiums that specific plan restrictions mean you don't qualify for the benefits when you actually need them.

Not All Cancer Insurance Plans Are Equal

"After a plan is issued, some carriers have deceptive language pertaining to coverage, while others are quite respectable with paying legitimate claims," Randall says. What this means is that researching your options, and checking the reputation of the insurance company, is extremely important. "The policy is only as good as the company's promise to pay the claim. This means that company credibility is of the utmost importance," he adds.

Read the Fine Print

It's also essential to read the fine print before you sign. "All too often, people don't realize the disclaimers that are in there and they find out the hard way, once it's too late." If you're still tempted to purchase cancer insurance despite these risks, he stresses the importance of having a Certified Financial Planner who is well versed in insurance issues look through the paperwork to apprise you of exactly what you're getting so there won't be any surprises later.

Even better, though, Randall says, is skipping such a narrowly focused insurance policy and instead purchasing a more general disability insurance policy that covers a range of circumstances. You can usually get such a policy through your employer, or can purchase it through an insurer directly.

The Importance of Health Insurance

You should also make sure you have a good reliable health insurance policy that will cover most of your treatment expenses.

"Access to comprehensive health insurance can prevent delays in diagnosis that lead to harder and more expensive to treat advanced stage disease — a frequent source of financial hardship for families affected by cancer," says a spokesperson for the American Cancer Society Cancer Action Network (ACS CAN).

ACS CAN is the advocacy affiliate of the American Cancer Society and although ACS and ACS CAN don't take a formal position on cancer insurance, they do recognize the benefits that health reform brings to cancer patients, survivors, and their families.

"The Affordable Care Act removes many of the barriers that until now made health coverage inaccessible or inadequate, including banning discrimination based on health history, offering subsidies to make coverage more affordable, and guaranteeing a basic level of coverage through the essential health benefits requirement," Reidy says. To learn more, you can visit ACS CAN's website.

Alissa Crispino and David Randall reviewed this article.

Still weighing the pros and cons about cancer insurance? Read about the potential benefits of here.




Randall, David, CFP. LPL Financial. Phone Interview 7 June 2013.

American Cancer Society Cancer Action Network. Interview. 7 June 2013.