5 Critical Things You Need to Know About Cancer Insurance

With cancer remaining one of the top killers in Singapore, cancer insurance should be an integral part of your protection portfolio. Here’s what you need to know.

Cancer insurance is an increasingly popular type of insurance in Singapore for a good reason—two good reasons, in fact.

First, cancer is the leading cause of death in the country. With the National Cancer Centre of Singapore estimating as many as one in four Singaporeans may develop cancer in their lifetimes, it’s not surprising that almost 30% of all deaths are attributed to this disease.

Second, treating cancer is expensive. For instance, the Ministry of Health notes that a quarter of all patients paid over S$71,653 to remove lung tumours (assuming severe complications), with half of them paying over S$22,441.

Bear in mind that such data don't stay that way—medical costs increase every year. 

In its 2020 Global Medical Trends Survey Report, global risk advisory firm Willis Towers Watson estimates a 9.3% increase in healthcare costs in Singapore in 2020. This is over nine times the country’s estimated inflation rate of under 1%, and almost triple the estimated salary increment of 3.7%.

Last, but not least, this doesn’t even account for the opportunity cost of lost and reduced wages resulting from the treatment. When this is factored in, Singaporeans are on average facing a six-figure protection gap.

So, it’s no wonder that many Singaporeans are turning toward cancer insurance. When it comes to cancer, it’s much better to be safe than sorry—especially if you have dependents.

Before you look at and compare the various cancer insurance plans on the market, you should first understand these five critical things about cancer insurance.

#1: Cancer insurance and medical insurance do not overlap

Probably the most common question people have about cancer insurance is how it differs from medical insurance.

The answer lies in the payout structure. Medical insurance is all about covering actual medical costs incurred, whereas cancer insurance is about a one-time lump sum payout in the event of a cancer diagnosis.

So, medical insurance can only reimburse you for the actual cost of surgery, consultations and the like. Cancer insurance will pay you the assured sum upon your diagnosis. Whatever you decide to do with that payout is entirely up to you. This payout will also be on top of whatever existing plans you already have, whether medical or critical illness.

Essentially, this means that a cancer plan acts as an additional source of funds for you and your loved ones to tap into. Because the benefits are paid as a lump-sum of cash, cancer insurance provides flexibility. You can use the payout to cover co-pays and deductibles – portions of your medical bill not covered by your healthcare plan – and other out of pocket expenses. 

Importantly, cancer insurance benefits can also help to make up for lost income due to hospitalisation and during recovery, reducing the financial stress faced by your family.

#2: It covers all forms of cancer

There are over 100 known forms of cancer that affects humans. If you have cancer insurance, it doesn’t matter which specific form you get—whether one of the relatively less serious ones or the more alarming ones. As long as you have a confirmed cancer diagnosis, you will be eligible to receive the payout.

Also, it is now common for cancer plans to pay out at all stages, which means you will be able to receive your benefits even if your cancer is at its early stages. While this sounds logical, you might be shocked to know that cancer plans used to only pay out at late stages, acting more as a supplement to the death benefit on a life insurance plan.

The ability to muster your financial resources as early as possible is important, because advances in cancer treatment means more cancers are treatable today. Indeed, early detection and treatment is critical in improving patient survival rates. Being able to start treatment at an earlier stage of cancer can also lower treatment costs, as less aggressive modalities may be needed. 

#3 Cancer insurance is straightforward and affordable

Many insurance plans, especially investment-linked ones, have rather complex structures. You must evaluate things like cash value, guaranteed and non-guaranteed amounts, what investment vehicles your premiums will be invested in, and so on.

All these don’t apply to cancer insurance, which is simple and straightforward. If you get diagnosed with cancer, you receive the lump sum payout, and the policy is over and done with. Until then, you just pay an annual premium – which in most cases, is highly affordable..

The structure of cancer insurance is almost identical to that of critical illness insurance. The only difference is that critical illness insurance covers dozens of diseases, whereas cancer insurance is much more specific.

Because of this specificity, it is also much more affordable. While annual premiums for critical illness insurance can run into the thousands, premiums for cancer insurance can be less than S$100 a year.

The premiums will differ based not just upon the sum assured (which can go as high as S$200,000), but also on personal risk factors such as age, lifestyle habits like smoking, and whether there is a family history of the disease.

#4 Cancer insurance may be essential for certain patients

Earlier this year, the Ministry of Health introduced the Cancer Drug List (CDL). Only cancer drugs on the CDL will be covered by MediShield Integrated Plans (IPs). This change was implemented in a bid to slow the rising costs of cancer treatment drugs; between 2016 to 2019, spending on cancer drugs grew 20 per cent annually.

While the CDL encompasses 340 different medications that have been proven to have the highest efficacy, this only covers around 90% of cancer therapies approved by the Health Sciences Authority. 

The implication here is that should a patient require cancer treatment that is not on the CDL, they will not be allowed to use their MediShield IP to offset the cost. This can impose a heavy financial burden.

Patients who fall into this category can seek assistance from government services. Alternatively, if they have a cancer insurance plan, they can make use of it to cover the cost of their treatments. 

In that sense, a cancer insurance plan may be essential, especially for those with challenging financial circumstances. And since you cannot qualify for a cancer plan after being diagnosed with the disease, it makes a compelling argument to consider applying for cancer insurance earlier rather than later.

#5 The structure varies from plan to plan (so make sure you compare)

Although cancer insurance plans are basic, there are still variations between different insurers’ plans.

For instance, some may pay out the full sum assured upon a confirmed cancer diagnosis—regardless of whether it is in the early stage or late stage. This means that should there be a recurrence, the policy will already have lapsed.

On the other hand, some plans may vary the payout amounts depending on which stage the cancer is in, with any remaining amount being paid out in the event of a recurrence. And while rare today, some plans might only cover late stage cancers, with additional riders needed to cover early stage diagnoses.

Finally, you should also look out for promotions to pay less in premiums.

The point is that cancer insurance plans are not necessarily identical. To make the best choice for yourself, you need to compare. And the easiest way to do that is by using SingSaver’s handy comparison tool of the various cancer insurance plans on the market today.