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Policy Provisions of Cancer Insurance Varied Significantly Pay Attention to Limitations to Avoid Claim Failure

  • 2017.01.16

Cancer is the number one killer in Hong Kong.  If one has the misfortune to be afflicted, the cost of cancer treatment can be very expensive.  Cancer-specific insurance as growing insurance products claims to provide cancer protection specifically.  What are the differences between these and the traditional insurance policies?  Are there any problems concerning compensation payable to the insured?  The Consumer Council reviewed 10 cancer-specific insurance plans in the market and found that the protection they offer is wider in scope in respect of cancer-related conditions and with waiting periods generally shorter when compared to the traditional plans.  But consumers should note that all cancer-specific insurance plans have limitations on coverage.  If consumers do not read the policy provisions carefully, the premium paid could be wasted without any protection.

The Council inquired of 13 insurance companies in the market and 8 responded, providing information on 10 cancer-specific insurance plans.  Among them, 4 fell within the category of critical illness insurance while 6 were medical insurance.  The main difference between the two can be found in the mode of benefit payout: critical illness insurance provides lump sum payments to the insured for him/her to discharge relevant expenses; medical insurance provides reimbursement for expenses incurred for cancer treatment.  Some plans also offer coverage for extended treatment or compassionate death benefit.  Although these two types of insurance both provide specific protection for cancers, the ways of payout differ, consumers should choose based on their needs.

Even though both the traditional critical illness insurance and medical insurance often include coverage for cancers, they impose more limitations and generally have a longer waiting period.  The traditional critical illness insurance covers only carcinoma-in-situ in limited areas of the body.  After purchase of the policy, consumers generally must wait for 6 months to 1 year before the protection of cancer comes into effect.  During the waiting period, if the insured is found to have symptoms or been diagnosed with a type of cancer covered by the policy, his/her claim will be denied.  Traditional medical insurance, in general, sets maximum benefits for different items, such as days for room and board and surgical fees.

Coverage of cancer-specific critical illness insurance, on the other hand, include carcinoma-in-situ and early stage cancer with waiting periods generally of 90 days.  Although cancer-specific medical insurance sets limits on benefits, including per covered cancer limit and lifetime limit, it does cover all expenses for hospitalisation, surgical fees, chemotherapy, radiotherapy and diagnostic tests deemed reasonable and customary.  If the total expenses do not exceed the per covered cancer limit and lifetime limit, the insured may receive full reimbursement.

Each cancer-specific insurance plan, however, may have different definitions of cancer, number organs to be covered and benefit calculations.  Consumers are advised to read each and every provision carefully.  All 10 of the insurance plans under review include wordings like "include carcinoma-in-situ/early stage cancer in the protection" in their product brochures or on its website.  But the 4 critical illness insurance plans differ in the organs covered and their definitions, such as carcinoma-in-situ or early stage cancer.  Moreover, the number of organs covered ranged from the least being 9 and the most 19, consumers should compare them carefully.

Take cervical cancer as an example.  4 critical illness insurance plans state cervix as one of their covered carcinoma-in-situ specific organs.  But according to their definition of "cancer" or "carcinoma-in-situ" in the policy provisions, some indicate they do not cover CIN I (mild intraepithelial neoplasia) and CIN II (moderate to marked dysplasia).  Also, one plan explicitly stating that carcinoma-in-situ must be at a grading of CIN III (severe dysplasia).  Should consumers be diagnosed with CIN I or CIN II, they would be denied insurance coverage.

Moreover, some critical illness insurance plans, claiming to include prostate cancer as a covered carcinoma-in-situ or early stage cancer, define "carcinoma-in-situ" to cover only "prostate cancer classified as T1a, T1b, T1c under the TNM staging system".  Other conditions with lower staging would be denied coverage.

In the 6 cancer-specific medical insurance plans, only 3 state in their promotional material or website that not all cancer types are covered.  Consumers insured under the other 3 plans which have no such reminder may mistake the plans to be all inclusive.

In terms of the calculation of benefits, if the person insured of the critical illness insurance policy is diagnosed with a carcinoma-in-situ or early-stage cancer, he/she will receive benefit payment for 10%-30% of the sum insured.  When there is a diagnosis of cancer, 100% of the insured sum will be paid.  Consumers should note that plans differ in the maximum number and amount of claims.  The 4 cancer-specific critical illness insurance plans stipulate that claims for carcinoma-in-situ or early-stage cancer would be limited to 2-3 times, for cancers in a different organ.

Cancer-specific medical insurance plans, on the other hand, offer reimbursement with restrictions.  For instance, one plan sets the per covered cancer limit at 1 million dollars, while maximum lifetime benefit is 3 million dollars.  Consumers usually pay a few thousand dollars a year for a cancer-specific insurance plan.  The insured would be unprepared if not protected when they are diagnosed with cancer.  Consumers should remember the followings to ensure their insurance products are well-suited:

  • Every cancer-specific insurance plan has different limitations. Consumers should compare before choosing to best suit their needs;
  • Do not make hasty decisions simply based on product brochures or promotional materials, read the policy provisions carefully before agreeing to purchase.  Seek detailed explanation if there is any uncertainty;
  • Make good use of the cooling-off period, learn about the definitions of "carcinoma-in-situ", "early or initial stage of cancer" and "cancer", as well as exclusions set out in the policy provisions.  The provisions may include cancer-related medical terms.  Consult a professional when necessary; 
  • Report honestly all physical conditions and habits, such as smoking and alcohol consumption, along with a full medical history.  Failure to make full disclosure may affect policy validity and the final compensation.

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