Cancer/Critical Illness Insurance

What it protects against
Cancer insurance protects against the financial consequences of cancer. Critical illness insurance protects against specified illnesses, including cancer, heart attack, stroke, major organ transplant and/or other major diseases.

How it works
These insurance products provide benefits in addition to traditional comprehensive health insurance plans and disability insurance. The cash they provide can be used for any purpose, such as travel to treatment centers and lodging, lost wages, home health care or modifications to a home or car to accommodate a wheelchair or other needs. Cancer insurance usually pays benefits for specific losses as they occur. Critical illness policies typically pay upon diagnosis a lump-sum benefit equal to a predetermined percentage of the policy's face amount.

Who needs it
People with a family history of cancer or heart disease may find these valuable. They make make sense for a family's sole wage earner or someone with little savings or a large mortgage. If your health plan has large deductibles and copayments, or provides reduced coverage for treatment outside a provider network, supplementary specified-illness products can cover those extra costs. Consider that health plans may not pay for a course of treatment you and your doctor may choose. These are supplmental insurance products and should not be used as alternatives to comprehensive health plans or disability insurance.

Who may not need it
People who have substantial assets, low debt and less financial responsibility for other family members.

When to buy it
When you are young and healthy. As with many insurance products, cancer and critical illness products offer lower annual premiums the younger and healthier an applicant is. Among major diseases, cancer in particular may strike young people. Once you are 80 or older, you may no longer be eligible for these policies.

How you pay for it
Periodic premiums for individual policies and payroll deduction for policies sold at work.

Terms to Know