Cancer cover can take care of your monetary worries

Disease-specific covers offer higher sum assured than regular mediclaim policies, besides making stage-based payouts

An Indian Council of Medical Research (ICMR) report, based on its National Cancer Registry Programme, says that the number of new cancer cases is expected to rise from 1.3 million in 2015 to 1.8 million in 2020.

Around 60-70 per cent cancer cases are seen in the age group of 3564 years. The cost of treating this dreaded disease can range anywhere between ~1.5 million and ~2.5 million, or even more, which makes it imperative to have an insurance cover. Since the amount of coverage provided by a regular mediclaim policy is likely to be inadequate, one option is to buy a standalone policy that covers all types of cancers.

Stand-alone cancer covers are fixed benefit plans that offer lumpsum payouts at different stages. The sum assured for these policies starts at ~200,000 and goes up to ~5 million. The policy term can range from five to 70 years. As these are pure protection plans, they do not offer any benefit in case the policyholder survives the policy term.

Cancer specific policies cover different stages of diagnosis – minor, major and critical. They cover various treatments, including chemotherapy, radiation therapy, hospitalisation, and surgery. The three stages of cancer that are covered include Carcinoma in Situ (CIS) or formation of tumour, minor stage, and major or critical stage. The payout happens depending on the stage in which the person is diagnosed. Around 20-25 per cent of the sum assured is paid out if the policyholder is diagnosed at an early or minor stage (the exact percentage varies from one insurer to another). If partial payment has been made by the insurer at an early stage, it is then deducted from the payment at the major stage.

For instance, if 25 per cent payment was made at the minor stage, only 75 per cent of the sum insured will be paid at the major stage.

Important exclusions include pre-existing cancer which is not covered by these policies. Then, skin cancer and cancer caused by sexually transmitted diseases, are also not covered. “Exclusions are important. People buying these policies should read the policy text carefully,” says Santosh Agarwal, associate director and cluster head-life insurance, Policybazaar.

Critical illness covers, too, provide lump sum cover for a number of critical ailments, including cancer. But they pay only a pre-defined amount upon diagnosis of any critical illness listed in the policy document. If you have a mediclaim policy, it will pay for hospitalisation expenses up to a certain limit. But there are several additional expenses that it will not cover. On the other hand, a standalone cancer cover will pay a pre-defined amount on diagnosis of the disease, and again at a couple of other stages, which can be used for treatment and to meet various other expenses that may arise. These cancer plans act as a supplementary cover that should be bought in addition to the basic mediclaim cover. “If, based on family history, a person has even an average risk of developing cancer, he should buy a standalone cancer product. But one should remember that a cancer plan cannot be a substitute for a basic health insurance policy,” says Khalid Ahmad, head of products, PNB MetLife Insurance.

A big benefit of a cancer policy is that future premiums are waived on diagnosis of the disease. One can also claim tax benefit under Section 80D on the premium paid. The premium for this cover is calculated based on the sum assured, policyholder's gender and age, term of the policy, existing health issues, and family history. A person is not covered if he has already got cancer due to the risk of recurrence.