I am writing this blog to try and clear up some of the misconceptions with cancer and the purchasing of life insurance. If you have had cancer or have it now, you are not completely out of luck. In 2018, the National Cancer Institute estimates there will be over 1.7 million new cancer diagnosis in the United States only. With that said, deaths from cancer have been decreasing over the last 20 years. With new technology and medicine, the survival rates are on the rise. The death rate caused by cancer has fallen 26% since 1991 for men and women. This is exciting news, because we all have been touched by this awful disease in one way or the other.
With the advancements in medicine and technology, having cancer now or in the past doesn’t mean you will not be able to buy life insurance again. There is a good chance you would qualify for life insurance depending on the severity of your case and the number of years you have been in remission.
Types of Life Insurance Available
There are two types of life insurance:
- Term Life Insurance
- Permanent Life Insurance
What’s the difference? I am glad you asked!
Term life is the simplest of the life insurance products. You have a guaranteed death benefit and a guaranteed premium. Term life is also going to be the cheapest (premium). The downside to term is that you only have it for a certain number of years (10-30 years) before it expires. There is also no cash value accumulation in a term policy. I compare buying term to renting. You basically rent the coverage!
Permanent life insurance is just like it sounds. You will have this coverage forever (age 121). Most permanent policies have a guaranteed premium and guaranteed death benefit, so it’s key to ask before buying a permanent policy. These policies build up cash value, although the way the cash value is earned may differ depending on the type of policy and the carrier.
Can I buy Life Insurance with cancer?
If you are currently in treatment for cancer, then you will not qualify for a traditional underwritten life policy. Don’t stop reading just yet though, there is an option for you. You would qualify for a Guaranteed Issue Whole Life policy. These are permanent policies that do build up cash value. The premium and the death benefit are guaranteed and lock in at the age you purchased the policy. The best part about these policies….NO MEDICAL QUESTIONS!! The death benefit amounts range from $5K-$25K.
Of course, this is great, but remember the old saying “if it sounds to good to be true, then it probably is”. These types of policies do have two drawbacks:
- The premiums are higher than a traditional life insurance policy but remember something is better than nothing. You can always apply later for a traditional policy after you have beaten the cancer. Keep in mind that it’s a good idea to get coverage whenever you can, especially with a cancer diagnosis.
- The death benefit for the first 2 years only pays out if the insured dies from an accident, does not cover natural causes during this time. However, they do return all premiums paid in. After the 2 year mark the full death benefit is paid for any cause. I know you’re thinking that you don’t want to take a chance that you die, and nothing gets paid. I fully understand, but take this into consideration, 2 out of 3 people live at least 5 years after a cancer diagnosis. All you must do is live 2 years. Once again, we recommend buying life insurance even if you are in the middle of treatment. Get the clock rolling on those 2 years as soon as possible.
You other option to buy life insurance if you are in the middle of cancer treatment is a group policy through your work. These policies usually don’t ask any health questions also and most always are reasonable priced. You need to make sure to ask your HR personnel when open enrollment begins and sign up. The downside to this type of policy is that if you leave work for any reason more than likely you will not be able to carry with you.
Can I buy Life Insurance if in remission?
If your cancer is in remission there is a good chance that you will qualify for traditional life insurance. This does depend on how long you have been in remission, what type of cancer, the treatment you received, and what stage it was. Other health factors (such as diabetes, high blood, pressure, high cholesterol, etc.) also will influence your chances of qualifying. We recommend waiting somewhere between 2-6 years before applying for life insurance. You will also want to find an experienced life agent to help guide you through the process. The agent should be able to recommend the company that is going to underwrite your policy favorable according to your cancer recovery.
During this process, be prepared to have this information for your agent:
- The date of diagnosis
- Any family history of cancer
- The dates of the first and last treatment, and what those treatments were
- What type of cancer, its stage, the location of the cancer, and whether it metastasized
- The size and whether it affected the lymph nodes
- If in remission, how long
- Any relapses associated with the cancer
- Medications that you are currently taking
- All doctors associated with your care
Having all this information handy will make the process go a lot smoother and you will get a decision much quicker. If information is missing the insurance carrier will not decide until the receive all documents. Also make sure you are following any treatment plan that may have been prescribed by your doctors during remission.
Different cancers due affect your ability to buy Life Insurance
Your approval and at what rating for life insurance also depends on what type of cancer you had and its progression. Metastasized cancer that has spread to other parts of the body is considered a higher risk and is usually a decline. Cancer that is localized, or in-situ is considered a lower risk and usually approved.
I am going to give you some references to go by:
- The survivors of non-melanoma skin cancer could be classified as a low enough risk that you could qualify for a preferred rate. Other health issues would factor in also.
- The survivors of breast cancer, prostate cancer, testicular cancer and thyroid cancer would be considered a moderate risk. You could qualify for a standard rate assuming no other health issues and the severity of the cancer. The longer the remission the greater the possibility of being approved at standard.
- Other cancers such as Melanoma and cervical cancer are usually classified as sub-standard risk. You will need to be in remission for at least a couple of years to be considered but it is possible.
- Types of cancer that would probably be a decline are leukemia, pancreatic cancer and colon cancer. Very few cancer survivors of these types get approved.
How does family history of cancer effect my life insurance quote?
If your family has a history of cancer this could affect your rate even if you have never been diagnosed with the disease. Life Insurance carriers typically look at immediate family members (mom, dad, brother, sister) cancer history (and heart history) before making an offer to the proposed insured. What they look for:
- Certain types of cancer are considered hereditary, so the carrier will want to know what kind of cancer any immediate family member had.
- They will also want to the age of diagnosis and if he/she survived. If your family is diagnosed with cancer in there senior years it is not considered as risky. If they were diagnosed before 50 it will affect your rating. I am not saying they will raise your premium excessively, but you may go from Preferred rate to a Standard rate. I know if doesn’t seem fair, but they have science on their side.
Using your existing policy to pay for bills caused by cancer
If you already own an insurance policy, whether it is term or permanent, you may be able to access some funds from it to help with any medical or financial bills cause by cancer. I am going to tell you about 3 ways to access money. Remember it is always good to consult an experienced agent like US!
- If you have a permanent policy, there is a good chance that is has cash value built up inside. Depending on what type of policy, how long you have had it, and how much you are paying will determine how much has accumulated. You can access this money two ways. You can withdraw or borrow (depending on the type of policy) the money. Do know that however much you borrow will reduce the face amount upon your death. Also, if it is taken out as a loan there will be some interest accruing until the loan is paid off. The good thing is you don’t lose the death protection. Your second option is to surrender the policy. Canceling a policy while in the middle of cancer treatment or even in remission is not a smart move. At this point in your life, you will need this policy more than ever. In other words, DO NOT CANCEL YOUR POLICY!!
- If you have bought a policy in the last 20 years (term or permanent) it probably comes free of charge with a rider that most people don’t even know about. This rider is the terminal illness rider. What this rider does is, it allows you to access up to 80% of the face amount if you are terminally ill. Terminally ill means that you have a life expectancy of 1 year or less. If a doctor has given you this diagnosis, then you would qualify. You would need to talk to a tax adviser about any tax implications. This is great feature attached to life insurance policies especially if the insured is the primary bread winner and cannot work.
- If you have bought a policy in the last 5-7 years (term or permanent) then you need to examine it carefully. Insurance carries started adding what is called a living benefits rider to some of there polices. It is mostly with term policies, but there are some permanent policies that also have this rider. What this rider allows you to do is access up to 24% of the face amount annually if you have major cancer diagnosis. The amount you receive is based on the severity of the case. Just like the terminal illness rider any amount you receive is does reduce the death benefit. These types of policies give you the best of both worlds. You have death protection and protection from a major health problem.
I know I have covered a lot of material in this blog, and I fully understand how confusing this can be to someone who has never been in the life insurance industry. That’s is why I have stressed how important it is to team up with an experienced agent like US! Please feel free to contact us with any questions.