Benefits of Cancer Insurance: What Every Indian Family Needs to Know

Treatment for cancer can put an Indian household in a large financial debt. According to a study published in BMJ Open, the direct out-of-pocket cost per cancer patient was estimated to be approximately ₹3.31 lakh per year, of which medicines and diagnostics constituted a significant proportion. The study also revealed that the overall expenditure on health services was high among patients. This is why it is important to understand the benefits of cancer insurance when considering the long-term healthcare expenses for families.

Cancer insurance is special insurance policy which is designed to give financial support when an insurance policy holder has been diagnosed with a covered form or stage of cancer. The benefit will be paid as a lump sum or payouts as outlined in the policy once the diagnosis is met by the policy conditions.  

Some cancer-specific health insurance policies pay a fixed amount based on the cancer diagnosis, instead of reimbursing hospital bills. This is the sum that can be used for the eligible treatment-related and household expenses under the policy terms.  

Typically the cancer type, the stage of the cancer, the length of survival, waiting periods, exclusions and the sum insured will all dictate coverage. Hence, it's essential to review the insurance policy terms before buying any policy. 

IRDA also suggests consumers to look out for the waiting period, exclusion or sub-limits, co-payment and eligible hospitals in their health insurance product analysis.

Cancer insurance and ordinary health insurance are very similar but also have some distinct differences. A standard health plan typically pays the medical and hospitalisation costs that are covered by the policy, whereas a cancer-specific plan aims at protecting the finances associated with the policy's covered cancer diagnosis.

A cancer plan should therefore not automatically be viewed as a replacement for comprehensive health insurance. Instead, the two may address different financial needs, depending on the coverage selected.

A cancer-specific policy may be considered by individuals who want additional financial protection against the potential costs associated with cancer treatment.

Individuals with a family history of cancer

People with a family history may consider discussing their insurance requirements with an adviser and checking whether the selected policy provides suitable coverage.

Working individuals

Cancer treatment can affect regular income while expenses continue. A policy providing a lump-sum benefit may help manage some financial obligations, subject to its terms.

Individuals seeking additional protection

Those who already have health insurance may consider whether their existing sum insured is sufficient for their needs and whether a separate cancer-specific policy could provide additional financial support.

Families planning long-term finances

Families with dependants may assess cancer insurance policy benefits as part of their broader financial protection strategy.

The key Cancer Insurance Benefits can vary by insurer and product, but commonly include the following:

Financial support after diagnosis

A qualifying diagnosis may trigger a benefit according to the policy's terms, helping the insured manage expenses beyond standard hospital bills.

Support for treatment-related costs

Cancer treatment may involve medicines, diagnostics, consultations and repeated procedures. A cancer-specific benefit can provide additional funds for such requirements, subject to the policy conditions.

Income-related support

Some products provide options that can help replace or supplement income during the treatment period. The actual benefit depends on the selected plan.

Additional financial protection

A dedicated cancer cover can complement an existing health insurance policy where the latter may not fully address all financial requirements arising during cancer treatment.

Cancer insurance does not necessarily cover every type or stage of cancer. The precise list depends on the insurer, product and policy wording.

Major cancers

Policies may cover specified major cancers such as breast, lung, prostate, colorectal, ovarian, cervical and other cancers, subject to the applicable definitions and conditions.

Minor or early-stage cancers

Some products distinguish between minor and major cancer conditions. For example, Tata AIA's current cancer-related products specify different benefits for minor and major cancer diagnoses. Its Sampoorna Care Cancer page states that the benefit can be 25% of the sum assured for a minor cancer condition and 100% for a major cancer condition, subject to the policy terms.

Blood cancers

Certain policies may cover specified blood cancers, but the exact conditions, definitions and exclusions should be checked in the policy document.

Organ-specific cancers

Cancer affecting organs such as the liver, kidney, stomach or pancreas may be covered when included within the insurer's defined list of covered conditions.

Coverage by stage

Some types of cancer plans offer benefits on a stage-by-stage basis. Consumers should take care not to presume that the only cancers covered by the policy are those named in the general term, but rather investigate the medical definitions, diagnostic criteria, waiting periods and exclusions.

Tata AIA also provides insurance schemes for cancer, such as Sampoorna Care Cancer coverage that covers multi-stage cancer. Tata AIA says that it covers 25% of the applicable sum assured in the event of a minor cancer and 100% of the applicable sum assured in the case of a major cancer, as per the policy terms. It also offers an alternative to having a lump sum for the major cancer benefit, as income for 1-5 years.

Tata AIA also has the Sampoorna Care Cancer Fund that ensures cancer protection along with a health-fund approach. According to the product page, the lump sum payout is one of the advantages of the cancer benefit, as is the option to turn up to 100% of the benefit into income, depending on the product terms.

Anyone considering buying this policy should look at the policy brochure, eligibility criteria and exclusions, waiting periods, premiums and benefit conditions.

Financial planning is an important aspect of health care preparedness, as cancer treatment may be costly, involving both medical and non-medical costs. There has been significant out-of-pocket spending by cancer patients in India, and a special insurance policy can supplement the financial support provided during a covered diagnosis. The value of Cancer Insurance insurance depends on the coverage, exclusions, waiting period, and payout of the policy selected. People should look at these features when deciding if this insurance is a better fit for them than their current health insurance and finances.