Types of insurance
If you have or have had cancer, you might be wondering how it will affect your insurance. Cancer can affect buying different types of insurance or making a claim.
Life insurance policies pay out when you die. Usually, the insurance will only pay if you die within the time covered by the policy. This is called the policy term.
After you die, life insurance can:
- pay off your debts, such as a mortgage
- provide money for your family.
Some policies include critical illness cover. This pays out if you are diagnosed with a serious illness. This can include types of cancer. It can sometimes depend on the stage or grade of the cancer. Most advanced cancers are covered.
Some policies include terminal illness cover. This pays out the full amount of life cover if you are expected to live less than 12 months. You can use this money for any purpose.
Types of life insurance
There are different types of life insurance.
Level term insurance
This pays out a lump sum if you die within the policy term. The amount is set when you start the policy. It does not change over time. If you live to the end of the policy term, you get no money back.
Decreasing term insurance
This is often taken out with a mortgage. The amount you are covered for goes down as you pay off your mortgage. Once you come to the end of the term, the policy ends and your life is no longer insured.
Increasing term insurance
To be able to keep the lifestyle you have, the amount you are covered for goes up. This is either by a fixed amount each year, or in line with inflation. Once you come to the end of the term, the policy ends and your life is no longer insured.
Whole of life insurance
Whole of life insurance does not have a policy term. It pays out the lump sum when you die, whenever that happens. Most policies now offer fixed premiums for the policy term. Some get reviewed after a set time, usually 10 years.
This type of policy used to cover and pay off endowment mortgages. It pays out a lump sum at the end of the policy term. The policy also pays out if you die within that time.
Some of the money you pay in each month (premium) will be invested. This might be shares or property investments. The value of this investment can go up or down, so you might not get back what you pay into the policy. There are some policies with guaranteed payments, but these are rare.
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 guaranteed whole of life insurance policies that do not require medical underwriting. This means you will be accepted for cover. You will get the insurance even if you have a medical condition.
If you die of natural causes soon after taking out an over-50s plan, it will not pay out in full. This is usually the first 1 to 2 years. If this happens, the money you paid in might get refunded.
Monthly payments for an over-50s plan are usually affordable, but the money it pays out might be low. If you live a long time, you may pay in more money than is paid out when you die. Buying a medically underwritten whole of life insurance policy can be better value than an over-50s plan.
Buying life insurance
If you are thinking of buying life insurance, there are things you can do:
- 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 or talk to an insurance broker or financial adviser.
- Contact your human resources (HR) department at work and ask if they offer a life insurance scheme.
If you have or have had cancer, you might find it difficult to get life insurance. It might depend on the type of cancer or the stage and grade. If you can get life insurance, you are likely to pay more than the average monthly premium.
You will be asked about the type of cancer you have. Your doctor may have to write a letter or fill out a form. They may ask you to have a medical examination.
If you no longer have cancer, it might become easier to get life insurance in the future. This is because the chance of some cancers coming back gets lower as time goes by.
There are laws to protect people from being treated unfairly (discrimination) when they have or have had cancer.
We have more information about unfair discrimination and insurance.
Can I get my life insurance money early?
If you want to take money from your life insurance policy, there are ways you can do this. If you decide to take the money early, the policy will not pay out to your beneficiaries when you die. Beneficiaries are people who get your money or possessions after you die. You may want to think about whether your beneficiaries could manage financially.
Our financial guides can talk to you about what this might mean for you and your beneficiaries. You can contact them on the Macmillan Support Line for free at 0800 808 0000.
These are some of the ways to get life insurance early.
Cashing in or selling your policy
If you already have an existing life insurance policy and you want to take money from it early, you might be able to cash it in or sell it on. This would be an older policy because you are unable to do this with new policies.
If you do cash in or sell your policy, your beneficiaries will not get a payout when you die. You may want to think about how your beneficiaries would manage financially before you decide.
If you cash in your policy, you will not get all the money you have paid in. You just get the cash value of the part of the policy that has been invested. There may also be charges.
If you sell your policy to a company, you get the money straight away. Once they buy the policy, they start paying the premiums. They then get the money that pays out at the end of the policy term. This is only an option if you have endowment insurance.
Terminal illness benefit
Some life insurance policies include terminal illness benefit. 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 money that is paid out even if you live longer. You can use the money for any purpose. You can check with your insurer to see if you have this.
Putting a policy in trust
It is possible to put an insurance policy in trust. This means any money it pays out will go to a person you choose. This can reduce the amount of tax that has to be paid on the money. It also makes sure the money goes to the person you want.
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 charge for this.
Paying for a funeral
Some people take out an over-50s plan to save money to pay for their funeral. This keeps it separate from their life insurance. Policies can have an option to pay the funeral director when you die. This is called a funeral benefit option.
Some people take out a prepaid funeral plan from a funeral director instead. Before taking out a prepaid funeral plan, it is worth asking the following questions:
- Are all funeral costs covered? What happens if they go out of business?
- What happens if I die outside of the UK?
Private medical insurance can help cover or repay the cost of private treatment. Private medical insurance can sometimes help with costs related to treatment, such as wigs or prosthetics.
It can be harder to get private medical insurance after a cancer diagnosis. If you buy private medical insurance after you were diagnosed, cancer might not be covered by the policy. Any health condition you get after you buy the policy should be covered.
Buying private medical insurance
Before you buy private medical insurance, an insurer will assess how likely you are to make a claim. This is called medical underwriting and there are different types.
This means any medical conditions you have or had close to taking out the policy will not be covered for 1 to 2 years. This is called a moratorium period. If a claim is made after that time, the medical condition will be covered. But there need to have been no symptoms or treatment during the moratorium period.
Full medical underwriting
Full medical underwriting means you will need to tell your insurer about your medical history. This includes information about:
- your health
- your lifestyle
- the health of close relations, such as parents and siblings.
Full medical underwriting is usually needed for:
- income protection insurance
- critical illness cover
- some private medical insurance.
Based on the information, the insurer will decide:
- whether to offer you cover
- what premium to charge you
- any other special terms or limits to include.
Medical conditions you get 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 want to switch to a different policy.
Medical history disregarded
You may get this type of policy through your employer. This type of underwriting generally includes pre-existing conditions. This means you can make a claim on medical conditions you already had before you took out the policy.
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)
- payment protection insurance (PPI).
We have more information about buying and claiming on protection insurance.
Car insurance protects you from losing money if your car is stolen or damaged. It can also protect you from losing money if you cause an injury to others or cause damage to property.
Car insurance and cancer
If you have or have had cancer, it can affect your car insurance policy. You may be told by your healthcare team that you should not drive. Side effects of cancer treatment can sometimes affect your ability to drive safely. You should tell the DVLA or DVA about your medical conditions and treatments. They might ask your cancer doctor for more information.
You can be fined up to £1,000 if you do not tell the DVLA or DVA about any health conditions that can affect driving. You could also be prosecuted if you have an accident.
It is also important to tell your car insurer if you:
- are unable to drive for a period of time
- need an adapted vehicle.
If you do not tell them, you might not be able to make a claim on your car insurance later. If you are unable to drive for a period of time, your insurer might reduce your premiums until you are back driving again.
For guidance about finding the right car insurance for you, or for advice about contacting the DVLA or DVA, call the Macmillan Support Line for free on 0800 808 0000and speak to the financial guides team.
Adapting your car
You may need to adapt your vehicle to meet your needs. Make sure to tell your insurer straight away if you make changes to your car. If you do not, you may not be covered if you make a claim. Adaptations can make it more expensive for the insurance company to repair your car. Your car insurance premiums might go up.
For information about adapted vehicles, mobility scooters and electric wheelchairs, contact Driving Mobility by calling 0800 559 3636.
If you have questions about your insurance policies, contact the insurer company.
Our financial guidance team can give you free, independent guidance on all aspects of your personal finances. This includes:
- 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.
Below is a sample of the sources used in our insurance and cancer information. If you would like more information about the sources we use, please contact us at email@example.com
MoneyHelper. What is life insurance? Available at: www.moneyhelper.org.uk/en/everyday-money/insurance/what-is-life-insurance (accessed March 2023)
MoneyHelper. Over 50s life insurance. Available at: www.moneyhelper.org.uk/en/family-and-care/death-and-bereavement/over-50s-life-insurance-is-it-worth-it (accessed March 2023)
MoneyHelper. Using a trust to cut your Inheritance Tax. Available at: www.moneyhelper.org.uk/en/family-and-care/death-and-bereavement/using-a-trust-to-cut-your-inheritance-tax (accessed March 2023)
This information has been written, revised and edited by Macmillan Cancer Support’s Cancer Information Development team. It has been reviewed by expert medical and health professionals and people living with cancer. It has been approved by Amanda South, Service Manager – Financial Guidance Team.
Our cancer information has been awarded the PIF TICK. Created by the Patient Information Forum, this quality mark shows we meet PIF’s 10 criteria for trustworthy health information.
The language we use
We want everyone affected by cancer to feel our information is written for them.
We want our information to be as clear as possible. To do this, we try to:
- use plain English
- explain medical words
- use short sentences
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- make sure important points are clear.
We use gender-inclusive language and talk to our readers as ‘you’ so that everyone feels included. Where clinically necessary we use the terms ‘men’ and ‘women’ or ‘male’ and ‘female’. For example, we do so when talking about parts of the body or mentioning statistics or research about who is affected.
You can read more about how we produce our information here.
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