Types of insurance
If you are living with cancer you may be thinking about buying insurance or making a claim. Find out more about how cancer can affect insurance.
There are lots of different types of insurance. They cover different events, and they offer different types of protection and different types of payout.
If you have or have had cancer, you may find it more difficult to get insurance that meets your needs.
Health insurance can help cover medical costs or repay the cost of private treatment. Some health insurance policies may include payments towards wigs and prosthetics.
If you are recovering from cancer, your insurance may exclude claims relating to your illness. But unrelated conditions that develop after you have taken out a policy do not usually affect your cover.
If you do not already have health insurance, it could be harder to get if you have cancer.
We have more information about claiming on health insurance.
Buying health insurance
Before you buy health insurance, an insurer will assess how likely it is that you will need to make a claim. This is called underwriting.
Insurers can underwrite health insurance in two different ways:
This means that the policy does not cover claims linked to health conditions you have, or have recently had, at the time you take out the policy. These exclusions usually last for the first 1 or 2 years of a policy. This is called the moratorium period.
If a claim is made after the moratorium period, the health condition is covered as long as there are no more related symptoms, medical advice or treatment (including taking medication) during the moratorium period.
Full medical underwriting
Full medical underwriting means you will need to provide details of your medical history. This assessment is usually used for:
- income protection insurance
- critical illness cover
- some types of private medical insurance.
The insurer may ask for your full medical history. This includes information about your health, your lifestyle and the health of your close family members.
Based on this assessment, they will decide:
- whether to offer you cover
- what premium to charge you
- any other special terms or limits to include.
Health conditions that develop after you have taken out a policy do not usually affect your premium or cover. But they may affect the terms you are offered if you wanted to switch to a different policy.
Life insurance is a type of insurance that pays out when you die. Sometimes it only pays out if you die during a certain period of time. This is called the policy term.
Life insurance is helpful for two main reasons:
- It can pay off debts left behind, such as a mortgage.
- It can provide money for your family after you die.
Many life insurance policies include terminal illness cover. This means the insurer will pay out the full amount of the cover straight away if you are expected to live for less than 12 months. You can keep the payout even if you live longer. You can use the money for any purpose. You should check with your insurer to see whether this is included in your policy.
Some life insurance policies will also pay out if you are diagnosed with a critical illness.
Types of life insurance
There are lots of different types of life insurance. If you have questions about your insurance policies, contact your insurer.
The main types of life insurance are listed below.
Level term insurance
This pays out a lump sum if you die within the policy term. The lump sum amount is set when you start the policy, and it does not change. If you live to the end of the policy term, you get no money back.
Decreasing term insurance
This is often taken out with repayment mortgages. The amount you are covered for decreases as you pay off more of your mortgage. If you live to the end of the policy term, you do not get any money back.
Increasing term insurance
The amount you are covered for either increases by a fixed amount each year, or increases in line with inflation. If you live to the end of the policy term, you do not get any money back.
Whole of life insurance
This pays out a lump sum at whatever age you die. Most whole of life insurance policies now offer fixed premiums for the policy term, or are reviewed after a period of time. This is usually 10 years.
This pays out a lump sum if you die within the policy term. If you do not die within this time, it pays out an amount at the end of this period. Part of the premiums you pay will be invested, for example in shares or property. The value of this investment can go up or down, so the amount of this payment is not guaranteed.
Many employers offer a type of life insurance called death-in-service benefit. It is usually available to every employee, whatever their state of health. Speak to your human resources (HR) department at work to find out more.
Over-50s plans are whole of life insurance policies that do not require medical underwriting. This means you will not be asked questions about your health when you apply for the policy. The payout is also not affected if your health is poor when you take out the policy.
If you die of natural causes within 2 years of starting an over-50s plan, you will not get a full payout. But there may be a refund of the money you have paid in.
The monthly payments are usually an affordable amount, but the final payout may not be large. If you live for many years after you take out the plan, you may pay in much more money than is paid out when you die.
For these reasons, buying a medically underwritten whole of life insurance policy can be better value than an over-50s plan.
Covering funeral costs
You may choose to take out an over-50s plan if you are saving money for a certain reason, such as a funeral. You may do this if you want to keep this separate from your other life insurance.
Some policies include an option to make a payment directly to a funeral director when you die. This is sometimes called a funeral benefit option. It can give a slightly higher payout.
Some people prefer to pay for their own funeral using a pre-paid funeral plan. These may be better value for money, but you need to make sure you ask the following questions:
- Does the plan cover all the costs of the funeral?
- What happens if the funeral home goes out of business?
- What happens if you die while overseas?
Waiver of premium benefit
A waiver of premium benefit means you will not have to pay your insurance premiums if you cannot work because of illness or disability.
Buying life insurance
If you are thinking of buying life insurance, it is important to search for the best insurance for your situation. Here are some tips that may help:
- Contact your mortgage provider first - ask them if life insurance is included in your mortgage repayments.
- Get quotes from a range of insurance providers - you could use a price comparison website to find life insurance cover that meets your needs. Or you could talk to an insurance broker or financial adviser.
- Contact your human resources (HR) department - ask if your employer offers a life insurance scheme that you can join.
If you have had or are living with cancer and you want to buy life insurance, you will usually be offered a higher premium than average. Or you may be refused cover altogether. Life insurance policies with an exclusion for cancer-related claims are rare.
The type of cancer you have and the stage it is at will affect:
- whether or not you can get life insurance
- the terms of the cover.
The insurer will want to see your medical reports. They may ask you to have a medical examination.
Some insurance brokers or financial advisers specialise in arranging life cover if you have an existing health condition. But the decision will always depend on your personal situation.
If you have fully recovered from cancer, you might find it more difficult to get life insurance after finishing treatment. The premiums may be high at first, but for most cancers the risk of the cancer coming back gets lower over time. This means that the cost should come down.
There are laws that protect people from unfair discrimination when they have or have had cancer.
We have more information about unfair discrimination and insurance.
Putting a policy in trust
It is possible to put an insurance policy in trust. This means that any payout will be made to a person you choose. This may reduce the amount of tax due on the payout. It also makes sure whoever you have chosen to receive the payout will get it.
Not putting a policy in trust means your beneficiaries will have to wait until your estate is settled after your death. This could take months, or even years.
Ask your insurer or financial adviser about putting a life policy in trust. There is usually no extra charge for doing this.
Getting money early from life insurance
If you already have a life insurance policy and you want to take money from it early, you might be able to cash it in or sell it on. If you do this, the policy will not pay out to your beneficiaries when you die. You may want to think about how your beneficiaries would manage financially before you decide. Here are some of the more common ways you might be able to get money early from a life insurance policy:
Cashing in an investment policy
Some types of life insurance are investments and can be cashed in early. You will not get back all the money you have paid in as premiums. You just get the cash value of the part of the policy that has been invested. But that cash value may be low, especially if you have not had the policy for very long. There may also be a charge.
Terminal illness benefit
Some life insurance policies include an extra benefit called terminal illness benefit. This means that if you are expected to live for less than 12 months, the insurer will pay out the full amount of the insurance cover straight away. You keep the payout even if you live for longer. You can use the money for any purpose. Check with your insurer to see whether this benefit is included in your policy.
Selling a life insurance policy
An alternative to cashing in a life insurance policy is to sell it to someone else in return for cash immediately. This is done through a specialist company. The buyer takes over paying the premiums and they get the payout at the end of the policy. This option is only available for endowment insurance policies (see above).
You may need to think about how your family, or anyone who depends on you financially, would cope if your illness becomes worse or if you die.
Our specialist Financial Guidance service can provide more information about:
- Government benefits
- Budgeting and planning
- Financial products such as overdrafts
- Managing debt.
You can call our Financial Guides for free on 0808 808 00 00.
Protection insurance can help cover your costs if you become too ill to work or are diagnosed with a serious illness. There are different types of protection insurance. These include:
- critical illness cover
- income protection insurance
- mortgage payment protection insurance (MPPI)
- short-term income protection insurance (STIP)
- and payment protection insurance (PPI).
We have more information about buying and claiming on protection insurance, if you have been diagnosed with cancer.
What is car insurance?
Car insurance protects you from losing money if your car:
- is stolen or vandalised
- catches on fire
- is involved in an accident.
It can also protect you from losing money if you cause any damage to another person or their property while driving.
However, if you have cancer, it may be more difficult or risky for you to drive. Your car insurance may be affected.
Your doctor might tell you that you cannot drive. This could be because of medical problems caused by cancer or the side effects of cancer or its treatment.
If cancer might affect your driving, the DVLA or DVA may change your driving licence so that you can only drive certain vehicles.
You can be fined up to £1,000 if you do not tell the DVLA or DVA about any health conditions that affect your driving.
It is also important to let your car insurer know if anything has changed. For example, this may be if you are unable to drive for a period of time, or if you need an adapted vehicle. If you do not tell them, you might not be able to make a claim on your car insurance later.
For guidance about finding the right car insurance for you, or for advice about contacting the DVLA or DVA, call the Macmillan Support Line on 0808 808 00 00 (7 days a week 8am - 8pm) and speak to the financial guides team.
Adapting your car
You may need to adapt your vehicle to meet your specific needs. Make sure to tell your insurer straight away if you make any adaptations to your car. If you do not, you may not be covered if you need to make a claim. Adaptations to your car could make it more expensive for the insurance company to repair your car. If this is the case, the cost of your car insurance may increase.
For information about adapted vehicles, motorised scooters and powered wheelchairs, contact Driving Mobility by calling 0800 559 3636.
If you have questions about your insurance policies, contact your insurer.
Our financial guidance team can give you free, independent guidance on all aspects of your personal finances. This includes pensions, mortgages, insurance, retirement, borrowing and savings.
Our financial guides all have experience of the financial services industry and their role is to help people affected by cancer understand their options after a cancer diagnosis.
You can call the Macmillan Support Line free on 0808 808 00 00 (7 days a week 8am - 8pm) and speak to the financial guides team.