Cancer Survivors and Life Insurance
Gordon R. Evans, MD and Robert P. O'Leary, CLU
ChoiceQuote Insurance Services, Inc
Copyright © 2006, Gordon R. Evans, MD and Robert P. O'Leary, CLU
Last Modified: November 20, 2006
On a Tuesday in January 1998
The urologist confirmed that I had prostate cancer. Because the diagnosis indicated [that] the cancer was aggressive, he recommended removal [of the prostate on] the following Monday. My wife and I went to the car and tried to digest what we had been told. "What are you going to do?" she asked. My response was simple, "We've got to get smart fast about the options." As I had previously had another form of cancer in situ, the approach [to obtaining information] was obvious.
On the Internet, we found a wealth of information including Andy Grove's definitive Fortune Magazine article, "Taking on Prostate Cancer." After a few days of downloading and digesting articles, I remember two distinct thoughts: "Now I have the options" and "Oh boy, they're going to do some of this stuff to me." To get started on the journey into medicine, I summarized my observations and found the best oncologist in the practice group. We then met what seems, in retrospect, to be an endless chain of other physicians before the treatment decision was made (to talk about hormones, external beam radiation therapy, and brachytherapy). The nice aspect about prostate cancer -- what an oxymoron -- is that PSA, or prostate specific antigen, is the best way to monitor of treatment success. My PSA continues to run in the lowest range, so the protocol appears to be successful to date.
Improvements in Outcomes
Cancer is a disease in which certain body cells multiply without any apparent control, destroying healthy tissue and organs and endangering life. It is one of the leading causes of death, and without proper treatment, most types of cancer are fatal.
In the past, the various methods of cancer treatment gave patients limited hope of success, but the techniques for both diagnosing and treating the disease have improved greatly since the 1950's. Today, the majority of people treated for cancer recover completely or live much longer than they would have without treatment. Modern medicine is moving rapidly in promoting early diagnosis and improved treatment methods. Insurance Companies now are able to offer insurance to many people who were considered uninsurable just a few years ago.
There are more than one hundred identifiable forms of cancer, with varying rates of long-term success after treatment. This allows insurance companies to have a better-defined risk when insuring a cancer survivor.
Cancers by Classification
There are three main classifications of cancer. Carcinoma is cancer of the epithelial tissue that forms the skin and lining of the internal organs and other glandular tissues. Sarcoma is cancer of connective tissue, such as cartilage, muscle, or bone. Finally, when "fluid" cancer exists it is called leukemia or lymphoma, which affects the blood and lymph systems.
Most common skin cancers, and cancers called "carcinoma in situ" (which can occur in various organs and locations) are insurable once removed and once pathology reports indicate complete absence of the cancer. To understand life insurance pricing, we need to define the levels of insurance pricing and the cost of insurance. The categories of premiums, as classified from lowest to highest premiums, are: Preferred Best, Preferred, Standard, and Standard with surcharge. Individuals with skin cancers will typically find offers of Standard or Standard with surcharge in the near-term. As carcinoma in situ usually indicates a very early stage of cancer and is usually curable, individuals may be offered Preferred premiums after a waiting period of about five years.
The four most common cancers in men (excluding skin cancers and carcinoma in situ) are: prostate, lung, colorectal, and pancreas. In women, the most common (again excluding skin cancers and carcinoma in situ) are: breast, lung, colorectal, and pancreas.
Physicians have three main methods of treating cancer: surgery, radiation therapy (aka: radiotherapy, external beam radiation, etc.), and drug therapy (chemotherapy, hormonal agents, or biologic therapy). In many cases, treatment consists of two, or possibly all three methods. Insurance underwriting considers the extent of treatment to evaluate insurability, as well as the time lapsed since completion of treatment, prognosis, and current lifestyle.
Insurance companies, in light of the diversity of cancers, look very carefully at staging and the aggressiveness of tumor. They rely very heavily on pathology reports describing the tumor in detail. Without this information, insurance companies may necessarily take a more negative approach to insurability. Companies will carefully consider the treatment received and the time lapsed since final treatment. Again, many cancers will be considered cured after a period of time has elapsed.
Obtaining the information about cancer history and treatment may require more processing time than in an applicant who has not had cancer. Furthermore, your medical provider may need to supply more information than usual. Insurance companies also look at the type of policy applied for and may be able to offer insurance at lower rates (cost per thousand dollars of insurance) with cash value insurance policies.
If the life insurance is for estate planning purposes, applicants should consider joint life polices, where underwriting focus can be on the healthy individual joint insured. This type of policy can have a premium advantage, even if one individual is uninsurable, because of the use of a joint mortality table (cost of insurance). Discuss this option with your agent.
In the past few decades, much has been learned about cancer prevention. Certain lifestyles and exposures have been discovered that increase cancer risk. A documented change in lifestyle to lessen the probability of cancer and enhance longevity will be considered in pricing by life insurance companies. For example, quitting smoking can result in up to 50% lower premiums after three years time. In the final analysis, only a thorough evaluation of medical records will help to develop a written offer for the prospective applicant to consider.
Types of Insurance Plans
For practical purposes, the types of insurance available will fall into two categories: term insurance or cash value insurance.
Term insurance is pure insurance. As such it has no extra features and should be the lowest cost outlay for protection (cost per thousand dollars of insurance) for a specific period of years (e.g. 5, 10, 20, 30 years). Term life insurance has the greatest appeal when the need is short (20-25 years or less), a premium guarantee is desired, and the availability of life insurance will not be a major consideration for survivors of the deceased in later years. The length of guarantee is the key in choosing this type of policy - how long would the deceased's survivors need life insurance as a substitute for lost income?
Unfortunately, for some health or habit histories, only cash value policies will be available. As cash value insurance does have the extra features, premiums can run 5-8 times or more the cost of term protection. Cash value policies include: whole life, variable life, universal life, and survivor life. These plans are often called permanent insurance, with the common feature of a cash accumulation fund or cash value, which grows with time and in some cases, can be borrowed against. If insurance to pay estate taxes or to cover long-term needs of the deceased's survivors is an issue (more than 20-30 years), only a cash value life insurance plan can endure.
It's a question of fact as to which company and which policy will offer the best option for you. That's why folks use independent agencies to get bids from several companies that are potentially most responsive with offers to insure their pre-existing conditions.
Most special risk agencies can initially provide a "guestimate" of what the premium is likely to be. However, a formal offer of premium and plan type is subject to an insurance company-paid examination, application, and review of your records. Insurance companies make no charge for their initial offer at this time, but the underwriting process can take 6-9 weeks depending on the responsiveness of doctors and the complexity of the issues. Under certain circumstances, independent agents will submit the data to a number of insurance companies and request "best offer." This one-source shopping of the most competitive companies saves time and typically produces a wide variation in offers.
If you or a family member believes that acquiring life insurance is important for family lifestyle or estate planning, review your options with an independent agent.
Prior rejections, postponements or premium increases (rate-ups) may not preclude life insurance if enough time has lapsed. For example, prostate cancer is typically not insurable during the treatment period, but protection can be offered usually one-year post treatment and with a favorable PSA.
With 98% of the population insurable at some premium, it becomes a budget consideration once you have received the insurance company offers. And remember, requesting an offer does not mean that you are committed to take that offer. In the final analysis, the decision is yours.
A Life Insurance Update for Prostate Cancer Survivors from Bob O'Leary
When I originally co-wrote this article on March 20, 2000, I was a three year survivor of prostate cancer. Today, it's been eight years and other than a brief spike – most frightening – my PSA is under the magic threshold.
A Refreshing Update
Historically, a two year waiting period was typical before an insurance company would consider a prostate cancer survivor for life insurance. Recently, a major company provided us with the most liberal guidelines we've seen yet:
Stage I,II, A, B
12 months stability
Stage III, C
Moreover, The Wall Street Journal, Health Journal on November 14, 2006 provided an article entitled: Study on early prostate screening spurs Questions on What to Do with Results that helps understand the implications of PSA changes.
Companies that will offer pricing on life insurance for survivors continue to remain limited. Traditional carriers do not want the cancer survivor and price themselves to preclude viability. Fortunately, there are a few companies with Medical Directors who have expanded their acceptability standards as noted above.
What Will Happen?
If you have just been diagnosed, companies will likely postpone making an offer until treatment has concluded and a waiting period has occurred (see foregoing chart). Moreover, you will not receive the preferred pricing and, in fact, may be surcharged. If life insurance is a priority and the offer is too expensive an adjustment of the benefit amount or length of level premium pricing may be in order to reduce the premium.
For smaller amounts of insurance, (e.g. $5,000 to $50,000) specialty companies offer insurance policies with guaranteed benefits after a waiting period. That wait is usually three years for sickness but immediate insurance for accidental cause for death. It is possible to "stack" these plans called "guaranteed acceptance life insurance" to obtain a higher total benefit but this type of insurance is not cheap. "Something is better then nothing" is not a bad philosophy in some cases.
Surcharged in the Past? Given the more liberal guidelines and a stable PSA in the acceptable range, shopping for lower pricing can be a win/win approach. However, don't have any religious experiences based on a promise of insurance! In other words, have a policy in hand before changing or canceling any existing insurance.
How to Determine Your Status
Seek information from an independent broker who has extensive experience in placing "special risk" clients. You may have to provide records initially to obtain a tentative quote. This preliminary process should produce a pricing range for you to evaluate.
Visit the ChoiceQuote sm website for more information on high risk groups and life insurance.
About the Author
Robert P. O'Leary, CLU, is President of ChoiceQuote sm Insurance Services, Inc., a national independent insurance brokerage with offices on the east and west coast. He has An MBA from DePaul University, is a CLU, Chartered Life underwriter and held licenses as a CFP, Certified Financial Planner and Insurance Analyst.
Choicequote sm offers a direct-to-consumer special risk life insurance shopping service via phone at 888.733.8376 ET. To contact him with questions by email use email@example.com
Gordon R. Evans, M.D., Medical Director, Beneficial Life, Salt Lake City, Utah. Specialist in Internal Medicine and Insurance Medicine.