Those with a family history of cancer should buy a standalone cover

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According to a report by the Indian Council of Medical Research (ICMR) based on its National Cancer Registry Programme, the number of new cancer cases is expected to rise from 1.3 million in 2015 to 1.8 million in 2020. Around 60-70 per cent cancer cases are in the age group of 35-64 years.  

The cost of treating this dreaded disease can range anywhere between Rs 1.5 million and Rs 2.5 million, or even more, which makes it imperative to have an insurance cover. Since the amount of coverage provided by a normal health insurance policy is likely to be inadequate, many insurance companies offer standalone policies that cover all types of cancers.  

Standalone cancer insurance plans are fixed benefit plans that offer lump-sum payouts at different stages. The sum assured for these policy starts from Rs 200,000 and goes up to Rs 5 million. The term of the policy can range from five to 70 years. As these are pure protection plans, they do not offer any benefit in case the policyholder survives the policy term.

Cancer-specific policies cover different stages of diagnosis, be it minor, major or critical. They cover various treatments, including chemotherapy, radiation therapy, hospitalization, and surgery.

The three stages of cancer that are covered include Carcinoma in Situ (CIS) or the making of a tumour, minor stage, and major or critical stage. The pay-out happens depending on the stage the person is diagnosed with. Around 20-25 per cent of the sum assured is paid out if the policyholder is diagnosed at an early or minor stage (the exact percentage varies from one insurer to another). If partial payment has been made by the insurer at an early stage, it is then deducted from the payment at the major stage. For instance, if 25 per cent payment has been made in the minor stage, then only 75 per cent of the sum insured will be paid at the major stage. 

Pre-existing cancer is not covered by these policies. Certain cancers such as skin cancer and cancer caused by sexually transmitted diseases are also not covered by these policies. "Exclusions are important and those buying these policies should read the policy wording carefully," says Santosh Agarwal, associate director and cluster head- life insurance, Policybazaar.

Critical illness covers too provide lump sum cover for a number of critical illnesses, including cancer. But they don't cover all the expenses incurred during cancer treatment. They pay only a pre-defined amount upon diagnosis of any critical illnesses listed in the policy document. If you have a mediclaim policy, it will pay for the cost of treatment up to a certain limit. On the other hand, these standalone cancer covers will pay a pre-defined amount on diagnosis of the disease, and at a couple of other stages,  which you can use for treatment and meet various other expenses that may arise.

A health insurance policy provides cover for hospitalisation expenses, but there are always several additional expenses that are not covered. These cancer plans act as a supplementary cover in addition to the basic health insurance plans. "If one is at an average risk of developing cancer depending on one's family history, one should have a standalone cancer product. But one should remember that a cancer plan cannot be a substitute for a  basic health insurance policy," says Khalid Ahmad, head of products, PNB MetLife Insurance.

On diagnosis of cancer, future premiums are waived off. One can also claim tax benefit under Section 80D on the premium paid. The premium for this cover is calculated based on the sum assured, policyholder's gender and age, term of the policy, existing health issues, and family history. A person is not covered if he has already got cancer due to the risk of recurrence.

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