A cancer diagnosis is one of the scariest things a person can go through in life. The initial shock of hearing those words can quickly give way to overwhelming fear about what it could mean. Survival is an obvious concern. The effect on your loved ones is another. If you pass away from cancer, will your life insurance policy pay out a death benefit to them?
As difficult as it is, this is a question you need to ask when you shop for life insurance. A comprehensive life insurance policy should cover cancer as a natural cause of death, but there are exceptions. Accidental death and dismemberment (AD&D) policies do not pay death benefits for cancer because the disease is not classified as “accidental.”
In this article, we’ll explore more about when and if life insurance will cover a cancer death to help you better prepare your financial future for your loved ones.
Cancer is a leading cause of death in the US
According to the American Cancer Society, cancer is the second leading cause of death in the United States. Only heart disease claims more people per year. Insurance companies know that, so there are generally provisions in the policy specific to cancer diagnosis and treatment. Those could include a waiting period for coverage or exclusions for certain types of cancer.
The waiting period is a safeguard for the insurance company. If your cancer diagnosis came before you applied for life insurance, it counts as a “pre-existing condition.” That doesn’t necessarily disqualify you from getting life insurance, but it could significantly increase your premiums. In extreme cases where the prognosis is fatal, you might not be eligible.
Your loved ones need financial security
Making sure that your life insurance policy pays out for cancer death is something you want to do when you first buy the policy, not after you’ve been diagnosed with cancer. Assume that it’s a possibility, especially if it runs in your family, and include it in your list of “needs” when you go insurance shopping. A registered insurance agent can help you find the right policy for you and your family.
Cancer treatments take their biggest toll on the patient but also impact the family. They often struggle to cover co-pays, transportation expenses, and medication costs. That’s over and above any income they’re losing from the patient’s inability to work. If that person dies, a life insurance death benefit might be the only way the family can recoup those losses.
Payout exceptions and death benefit disqualification
Your life insurance policy should cover cancer death, but your life decisions might affect the release of your death benefit. Some examples of this include the following:
- Excessive alcohol or drug use
- Lying on your application
- Engaging in risky activities
These exclusions should all be clearly stated in the terms and conditions of your life insurance policy. Read the policy carefully and ask your insurance agent specific questions about anything you’re unsure of. Sign your insurance agreement only after you have the answers you need.
Sources:
https://www.investopedia.com/which-types-of-deaths-are-not-covered-by-life-insurance-5094285
https://smartasset.com/life-insurance/what-is-the-life-insurance-waiting-period
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