Cancer diagnosis rates are on the rise, especially for younger people under age 55. Meanwhile, U.S. death rates from cancer fell by 33% between 1991 and 2021, largely due to early detection, effective treatments, and declines in smoking.1

Although it’s scary to consider the possibility of a cancer diagnosis, it might be helpful to prepare for the financial implications. Even with health insurance, today’s advanced cancer treatments can be very costly. And for self-employed individuals or workers who don’t have paid sick leave, taking time off for medical appointments or because they are not feeling well could make it difficult to cover their living expenses.

The Affordable Care Act made it illegal for insurers to deny coverage due to a pre-existing condition such as cancer, so losing access to health insurance is no longer the major concern that it used to be. However, some other types of insurance tend to be much more expensive and might even be impossible for a cancer survivor to obtain. Having at least one of the following policies in place before you are diagnosed could help stabilize your finances — so that you and your family have one less thing to worry about as you fight cancer.

Disability income insurance

Disability benefits could replace a percentage of your lost income if you are unable to work during cancer treatment or recovery (up to policy limits). If your employer pays for disability income insurance, it’s probably a short-term policy and may provide benefits for just three to 12 months.

A long-term disability income insurance policy provides extended coverage that may last for as long as cancer substantially impairs your ability to work (up to retirement age). Private disability income insurance usually offers more comprehensive benefits than Social Security or state disability programs.

Individually owned disability income insurance policies may offer the most coverage (at a greater cost), followed by group policies obtained through an employer or association.

Critical illness insurance

Critical illness insurance will pay you a lump sum if you become ill from — and then survive — certain illnesses or injuries, including life-threatening cancer. You can use the tax-free lump sum for whatever you want, whether it’s related to your illness or not.

It’s vital that you understand exactly what is covered (or not covered), which will be outlined in the policy. For example, what does the insurance company consider to be a life-threatening cancer? If you have a family history of a certain type of cancer, will the policy exclude that illness? Are there pre-existing condition limitations? Does the monthly premium increase as you get older? Finally, be aware that if you own one of these policies and never get sick, you won’t get any money back.

Permanent life insurance

If your life insurance policy has a critical illness rider, you may be eligible to receive some or all of the death benefit when you are diagnosed with an illness specified in the policy, which commonly includes cancer. You can use the tax-free proceeds however you wish, and any remaining death benefit will go to your beneficiaries.

Otherwise, you can typically borrow from any permanent life insurance policy that has accumulated a cash value. If you can’t repay the loan in full before your death, the balance will be subtracted from the proceeds that are payable to your beneficiaries.

Screenings Save Lives

The ages to begin screening for breast and colorectal cancers have been lowered in recent years. These guidelines are for people at average risk. Individuals with a family history of cancer or other known risk factors may be advised to undergo more thorough screenings and/or genetic testing.

Source: U.S. Preventive Services Task Force, 2024

The cost and availability of life insurance depend on factors such as age, health, and the type and amount of insurance purchased. Before implementing a strategy involving life insurance, it would be prudent to make sure that you are insurable. Optional benefit riders are available for an additional fee and are subject to contractual terms, conditions, and limitations as outlined in the policy. Any guarantees are contingent on the financial strength and claims-paying ability of the insurance company.

A complete statement of coverage, including exclusions, exceptions, and limitations, is found only in the disability income insurance policy. It should be noted that carriers have the discretion to raise their rates and remove their products from the marketplace.

1) American Cancer Society, 2024