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Critical illness insurance vs. cancer insurance

Critical illness and cancer insurance overlap on some types of cancer but largely cover different diseases.

11 minute read
Key highlights
  • Critical illness insurance and cancer insurance are both designed to supplement your existing medical insurance
  • Critical illness insurance may not cover all types of cancer but it does cover heart and vascular conditions, cancer-related conditions, and major organic failure
  • If you have critical illness or have had one in the last year, you may not be eligible
     

The idea of being diagnosed with a serious illness like cancer is terrifying for most people. But in addition to worrying about their health many people have to worry about their financial situation when they are diagnosed with a serious illness. Even if you have good medical insurance, you can end up facing thousands of dollars in out-of-pocket costs. For people without medical insurance or without good medical insurance the cost of a serious illness can be devastating. 

Supplemental insurance can help with the financial burden of a serious illness. Supplemental insurance policies pay out cash benefits to people that can be used to pay for the high deductibles that must be paid for medical insurance or to pay for expenses that aren’t covered by medical insurance. They can also be used for living expenses, which still need to get paid even when someone is too sick to work.

Cancer is one of the most common chronic illnesses that is diagnosed in the U.S.1, and there is supplemental insurance that covers only various types of cancers. There is also critical illness insurance which is designed to provide insurance coverage for a range of serious illnesses. 

What is critical illness insurance?

Most people assume that if they have good medical insurance their expenses will be covered if they are diagnosed with a serious illness. But that’s not always the case. The cost of treating serious health problems like cancer, a heart attack, or a stroke can be high and not all insurance companies will pay all the expenses related to that illness. 

Some of the expenses related to a critical illness that may not be covered by your primary health insurance include things like:

  • Blood tests or X-rays that need to be done to be sure that you are healthy enough to survive an emergency surgery
  • The cost of a surgical suite. Many hospitals have set charges either per hour or per procedure for use of a dedicated surgical suite that are billed separately from any other care
  • Surgical assistants and specially trained operating room nurses who are required to assist the surgeon. Their time is also usually billed in addition to other costs 
  • Blood, plasma, or other biological items that are needed to keep you alive during the surgery 
  • Surgical aesthesia and the time of an anesthesiologist to administer it and monitor your reaction to it
  • The surgeon's fee, which typically is separate from the fee for the actual surgery
  • Crutches, braces, a wheelchair, or other medical equipment that you need after the surgery
  • A post-operative recovery suite
  • Any hospital stay that is necessary after the surgery
  • Part-time nursing care or rehab care at home after the surgery

For a serious illness that require surgery and a hospital stay you could be looking at paying tens of thousands of dollars out of pocket. Critical illness insurance could provide a lump sum payment of anywhere from $6,000 to $20,000 per occurrence. 

If you have a heart attack and you are taken to a hospital with an in network provider the insurance company may cover most of the costs associated with that doctor’s care but they could refuse to pay for the costs of aesthesia or medical tests performed by specialists that are technically considered to be out-of-network. 

In a case like that having critical illness insurance could be a financial lifeline. Critical illness insurance would pay out a lump sum that you could use to pay the medical bills not covered by insurance or pay for your basic living and transportation costs while you are unable to work. Critical illness insurance is a financial safety net that can be used with your existing insurance to make sure that you get the care you need. 

What does critical illness insurance cover?

The illnesses that are covered by critical illness coverage depend on the policy that you buy. Some basic critical illness insurance policies only cover major illnesses or events like some types of cancer, a heart attack, or a stroke. Other policies have an extended definition of what a critical illness is and will cover:

  • Various types of cancer
  • Heart attack
  • Heart failure
  • Stroke
  • Major organ failure
  • Major organ transplant

Who needs critical illness insurance?

Critical illness insurance can help serve as a financial safety net for many people, especially those who may be at risk for developing a critical illness. If you have a family history of heart disease, any condition that could make you prone to blood clots or poor circulation, or if you have had health struggles then having critical illness insurance could help. Critical illness insurance is also something that people over 40 should consider getting to protect themselves as they get older because the chances of developing a serious illness increase as you get older. 

Like many other types of supplemental insurance, the cost of critical illness insurance depends on several factors including your age and the amount of coverage that you want to have but prices generally start low so this type of insurance is affordable to almost everyone. 

Critical illness insurance doesn’t cover all types of cancer however, so if you are generally pretty healthy but you have a family history of a specific type of cancer you might be better off purchasing a different type of supplemental insurance that is designed specifically for people that have cancer. 

What is cancer insurance?

Cancer insurance is a supplemental insurance for cancer patients that is specifically designed to help people offset the cost of cancer treatment. Every year there are more than 1 million new cases of cancer diagnosed, and more than 15 million people have a history of treated cancer in the U.S.2 Even with great health insurance the cost of cancer treatment can be devastating. People who are diagnosed with cancer often find themselves facing steep out-of-pocket costs. There may be high deductibles that to be met before health insurance starts picking up the tab for treatments. There are also expensive prescription medications that can cast $12,000 or more that aren’t covered by insurance as well as expenses for hospital stays, emergency room visits, and other treatment related costs. 

When someone is fighting cancer they also have to worry about household and living expenses while they can’t work like:

  • Rent or mortgage costs
  • Childcare
  • Transportation
  • At home care
  • Utilities
  • Food
  • Credit card payments
  • Car payments
  • Insurance payments

Fighting cancer can take a long time, which means that making ends meet every month can tough. A lump sum cancer insurance payment policy can be a big help in making sure that those living expense get taken care of as well as helping to pay down the costs of medical treatments and drugs that aren’t covered by traditional medical insurance. 

How much does cancer treatment cost with insurance?

If you look at how much cancer treatment costs, you will begin to see how easily a family could be totally devastated if one member of the family develops cancer. The government has taken steps to help mitigate the cost by forcing insurance companies to cap the out of pocket costs that people face for cancer treatment. In 2017, the out-of-pocket expenses for cancer treatment for a family with medical coverage was $14,3003. But that only caps the cost of medical treatment for cancer. That doesn’t take into account the other expenses that are incurred when fighting cancer like living expenses, the cost of experimental drugs, the cost of treatments that aren’t covered by insurance, travel costs if someone needs to travel for a treatment, and costs related to cancer recovery. No wonder the American Journal of Public Health found that 67% of all bankruptcies are tied to medical issues4.

Most Americans live paycheck to paycheck and almost 60% have less than $1,000 saved5, so getting hit with a cancer diagnosis could destroy the finances of many American families. 

What if I get cancer without insurance?

If you have been diagnosed with cancer you may not be able to get a cancer specific insurance policy. But, you should still be able to qualify for some type of medical insurance. 

Critical illness insurance vs. cancer insurance: Which could be better for you?

Critical illness insurance does cover some types of cancer so if you have a predisposition for a type of cancer that is covered under a critical illness insurance plan, then buying critical illness insurance is a probably a good idea. Choosing critical illness insurance over cancer specific insurance will give you some leeway and you will be protected even if you are diagnosed with something other than cancer. 

However, critical illness insurance doesn’t cover all types of cancer, especially cancers that might be treatable. Critical illness insurance only covers a particular set of cancers that are severe or terminal. So if you have a family history of a cancer that is highly treatable, like skin cancer, a cancer insurance policy might be a better choice because that will help you cover your living expenses if you or your child is diagnosed with a type of cancer that can be treated but will still interfere with your ability to take care of your family and pay for your own living expenses. 

The bottom line when it comes to choosing supplemental insurance is that you should get as much coverage as you can afford. If you can afford both critical illness and cancer insurance you should get both. However, if you have to choose one type or the other then you need to consider your lifestyle, your age, and your family history to decide which one is the best choice for you and your family.

 

Links to external sites are provided for your convenience in locating related information and services. Guardian, its subsidiaries, agents and employees expressly disclaim any responsibility for and do not maintain, control, recommend, or endorse third-party sites, organizations, products, or services and make no representation as to the completeness, suitability, or quality thereof.

This is not dental care advice and should not be substituted for regular consultation with your dentist. If you have any concerns about your dental health, please contact your dentist's office.

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Sources:

1. https://www.cdc.gov/chronicdisease/about/index.htm, 2019
2. https://www.fightcancer.org/sites/default/files/Costs%20of%20Cancer%20-%20Final%20Web.pdf, 2017 
3. https://www.fightcancer.org/sites/default/files/Costs%20of%20Cancer%20-%20Final%20Web.pdf, 2017
4. https://www.eurekalert.org/pub_releases/2019-02/pfan-6ob020719.php, 2019
5. https://finance.yahoo.com/news/58-americans-less-1-000-090000503.html, 2019

Brought to you by The Guardian Life Insurance Company of America (Guardian), New York, NY. Material discussed is meant for general illustration and/or informational purposes only and it is not to be construed as tax, legal, investment or medical advice.
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