Protection insurance and cancer

If you have been diagnosed with cancer or are off work because of it, you may be able to claim against any protection insurance policies you already have.

What is protection insurance?

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:

  • Insurance that pays you a regular income. For example, this may be to replace a salary you are no longer getting. This includes income protection insurance.
  • Insurance that pays out a lump sum. This includes critical illness cover.
  • Insurance that pays the regular payments (the premiums) for you, if you cannot work because of illness or disability. This arrangement is called a waiver of premium benefit.

Types of protection insurance

Critical illness cover

You can combine critical illness cover with life insurance, or buy it as a stand-alone policy. Critical illness insurers may ask questions about your health or the health of family members. Critical illness cover pays out a single lump sum if you are diagnosed with a serious illness that is specified in your insurance policy. This can include some types of cancer. The illness must be listed as covered by your insurance policy. The payout can be used for any purpose. For example, it can be used to:

  • pay off your mortgage
  • pay bills during a period off work
  • cover private treatment costs in the UK or abroad
  • pay for a holiday.

Critical illness cover will remain in place as long as you continue to pay the premiums.

Not every cancer diagnosis will be covered by a critical illness policy. This means a cancer diagnosis will not necessarily cause a payout. Check the wording of a critical illness policy to see which cancers are covered. If you do not understand the wording, contact the insurer.

Your cancer diagnosis might not cause a payout on your critical illness cover by itself. However, you may still be able to claim if you are unable to go back to work because of the cancer. This would be under something called a ‘total and permanent disability’ clause. Depending on the policy, this might apply if you cannot do:

  • the same work as before, or similar work
  • certain work-related activities such as lifting or writing
  • any work.

Income protection insurance

Income protection insurance pays out a monthly income if you are unable to work because of illness or disability. You will chose the level of income when you start the insurance. You will also chose a waiting period before the payments start. This may be from 4 weeks to up to 2 years.

When you take out income protection insurance, insurers may ask questions about your health or the health of family members. Income protection is a long-term insurance product. This means that your cover remains in place as long as you continue to pay the premiums.

The payments usually carry on until you return to work. If you reach retirement age before this happens, the payments will stop once you reach retirement age.

However, some policies pay out only for a maximum term. This could be 5 years, for example. Or it could be less for short-term income protection policies. Some policies will pay for rehabilitation to help you get back to work.

While you are receiving payments, the insurer will regularly review your claim. They will look for new medical evidence that may show a change in your situation. The payments may stop if you are considered able to return to work. You should let the insurer know if you change your job or move home after buying income protection insurance. If you do not, there is a chance your claim will be refused. Some policies also need you to keep paying the premiums while you are making a claim. You should check your policy documents.

If you claim benefits, they might be affected if you get a payout from an income protection insurance policy. Or your payout may be affected if you get benefits or are entitled to benefits.

Mortgage payment protection insurance (MPPI)

If you have a mortgage, this type of insurance may have been offered when you first arranged your mortgage. These policies might be called short-term income protection (STIP) (see below). Depending on what you agreed when you took out the policy, MPPI may cover your whole mortgage payment.

MPPI may also provide a small amount of cash to help with bills. This type of insurance may cover you because of:

  • illness
  • an accident
  • unemployment
  • all of the above.
  • It usually only pays out for a maximum of 1 to 2 years.

You will need to agree MPPI premiums and continuing cover with the insurer every year. You usually need to keep paying these premiums while you are ill. Check your policy documents if you are unsure.

It is important to claim MPPI as soon as possible, as the payout usually starts after a 30 day waiting period. This is called the deferred period.

MPPI usually pays out for a maximum of 12 or 24 months. It is important to keep up the mortgage payments after that time, to avoid any risk of losing your home.

Short-term income protection insurance (STIP)

Short-term income protection insurance (STIP) pays out for a maximum of 1 to 2 years. You can renew it every year. It is set up to provide a percentage of your income if you need to claim for accident, sickness or unemployment. The payout is paid monthly and can be used to cover household expenses, mortgage payments or rent.

Payment protection insurance (PPI)

If you are diagnosed with cancer and have a personal loan or credit card, you may have payment protection insurance (PPI). This helps cover your monthly repayments if you are signed off from work. It can cover repayments on:

  • loans
  • credit or store cards
  • catalogue shopping payments.
  • PPI pays out for a maximum of 12 or 24 months.

Try to make the claim as soon as possible. Usually the payout only starts after a waiting period of around 30 days, but it can be much longer.

If your claim is refused, call 0808 808 00 00 to speak to a financial guide. They can talk to you about your options.

A claims management company can offer to complain and seek compensation about a refused claim on your behalf. These companies will take a percentage of any compensation you are awarded.

Buying protection insurance

If you were living with or recovering from cancer before you took out a protection policy, your insurance may not include claims relating to your illness. But your cover is not usually affected if you develop a health condition after taking out a policy.

If you have cancer and do not already have protection insurance, some policies can be harder to get. You may be asked questions about your health or the health of family members. This is because some cancers can be linked to altered genes, which run in families. Insurers use this information to assess if you are likely to make a future claim. This is called medical underwriting.

If you have a family history of cancer, but you have had a genetic test that shows you do not have an inherited cancer gene, it is a good idea to tell the insurer. If you do not have any other health issues, you could get cover without any special conditions or limits.

The Association of British Insurers (ABI) has more information about genetic tests.

Claiming on protection insurance

If you have been diagnosed with cancer or are off work because of it, you may be able to claim against any protection insurance policies you already have.

There is usually a time limit on making a claim. So it is important to check your policy and make a claim as soon as possible. After the time limit, you may not be able to claim.

Before paying you any money, the insurer will do careful checks to make sure the situation you are claiming for is covered. This may include asking for medical reports from your GP and cancer doctor. You may also be asked to have a medical examination with another doctor.

It will usually take a few weeks to get your payout. Some payouts may affect what state benefits you can get.

Check your policy documents for details of how to make a claim. If you used an insurance broker or financial adviser when you took out the policy, they should be able to help with your claim.

You can call the Macmillan Support Line on 0808 808 00 00 (7 days a week 8am - 8pm) and speak to our financial guides team about how to make an insurance claim.