IQ expert Jason Beans: 10 questions to ask before buying cancer insurance

Q: I’ve heard of cancer insurance. What is it, and should I buy it? I’ve got a history of cancer in my family.

A: The need for cancer insurance has been hotly debated. While some say this additional coverage is a financial life preserver, others view it as wasted money. Cancer insurance usually is a secondary plan, meaning your major medical policy and disability insurance kick in first. Cancer insurance would come into play to cover what those plans do not. If your primary plans are good, this could be wasted money. If there are caps or gaps in your primary plans, and you have a history of cancer in your family, this could be insurance that saves your life and finances down the road.

Ultimately, the decision comes down to curbing your financial risk exposure and maximizing your access to treatment and high-quality care.

Men have slightly less than a 1-in-2 lifetime risk of developing cancer; for women, it’s slightly higher than a 1-in-3 chance, according to the American Cancer Society. On top of that, if you have a strong family history of cancer, your risk could be much higher.

Grappling with cancer is not only emotionally and physically taxing, it’s financially stressful and can wipe out a family’s savings. After someone’s major medical insurance pays the portion he or she is responsible for, the patient likely will be left with substantial medical expenses and the headache of fighting to get more of those expenses covered.

Cancer insurance acts as a veil to protect your income and assets from cancer-related expenses that your regular health insurance policy will not cover, such as deductibles, out-of-network specialists, experimental cancer treatment, child care, FDA-approved prescription drugs, travel expenses tied to treatments and even everyday living expenses.

Not all cancer insurance policies are the same, however; there’s a wide range in coverage and cost – from $10 to $40 a month. When you shop around, make sure you ask the right questions. Here are 10 key questions that can help you figure out whether a cancer insurance policy is right for you:

1. How much cancer coverage would you receive under your existing health plan? Another question to ask: Is it possible to upgrade your existing health insurance plan? Your current policy may be good enough, or you may want to “upgrade” your health plan for better coverage in the event you develop cancer. If your family health history of cancer is on the lower-risk end, then this option could cost you less and actually cover a wider range of benefits. Note that most carriers have restrictions on when you can change your health insurance coverage, so check with your human resources department.

2. Are you eligible? Are you a smoker? Have you been diagnosed with cancer in the past? If you answer “yes” to either of these, you may be ineligible.

3. What’s the coverage? This varies greatly. Some plans (the good ones) will cover out-of-pocket costs associated with hospital stays, radiation treatments, chemotherapy and bone marrow transplants.

4. Will it cover cancer-related illnesses? Most policies don’t cover cancer-related illnesses (such as an infection or pneumonia). Those can amount to a large portion of your medical costs.

5. Does the policy have time restrictions? Some policies have a mandatory waiting period and won’t kick for one month or several months. Other policies last only for a fixed period — two or three years.

6. Are travel expenses covered? Many cancer patients have excessive travel and lodging expenses related to their cancer treatments. Find a policy that takes this into consideration, especially if you’re living in an area that doesn’t have good cancer treatment options.

7. Are duplicate benefits covered? Make sure your major medical policy allows you to hold other coverage, like cancer insurance. Some major medical policies won’t pay claims if you hold two policies.

8. Does the plan offer wellness benefits? Some cancer insurance plans cover just one annual screening, while others cover up to three screenings a year.

9. Is the cancer insurance plan renewable or portable? Some companies can opt to not renew a policyholder. Portability rights ensure that if you leave your current employer, you still can keep your policy.

10. Would a different type of supplemental plan meet your needs? If you have a comprehensive major medical plan, it may be more effective and less costly to simply add a disability policy that would offset any financial hardships.

Remember, the first line of defense is having a solid major medical policy. View cancer insurance as a supplement to your existing coverage, not as a substitute. Finally, ask the right questions when you’re searching for a policy.

Jason Beans is CEO of Chicago-based Rising Medical Solutions, a medical cost containment/care management company serving the workers’ compensation, group health, auto and liability markets. Beans founded Rising in 1999. Since then, Beans has received a number of honors, including Business Council Advisory Man of the Year and Midwest finalist for Ernst & Young Entrepreneur of the Year. Rising has appeared several times on the Private Company Index’s Top 10 Growth list and Inc. magazine’s Inc. 5000 list.

Beans earned a master’s degree from MIT’s Entrepreneurial Masters Program and a bachelor’s degree in finance from Boston College.

For more information, visit www.risingms.com.

If you have a health insurance question for Jason Beans, please send it to john.egan@insurancequotes.com.