UPDATED: Nov 11, 2011

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Written By: Laura BerryReviewed By: Daniel WalkerUPDATED: Nov 11, 2011Fact Checked

Cancer is a leading cause of death in America. Because treatment often lasts for a very long time and can consist of several types of medications, surgeries, and therapies, cancer treatments can be a huge financial drain. Some patients find that their health insurance will no longer cover the full cost of chemotherapy or other necessary treatments, either due to exclusions written in the policy or because the insured has received the maximum benefits payout.

Cancer Insurance and Other Options

To counteract the high cost of cancer care, many individuals opt for cancer insurance or other types of extended benefits packages. While these options may be a good choice for some people, they do not cover preexisting conditions. Extended health benefits may also be expensive and unavailable to many consumers. In situations where health insurance can no longer cover the cost of chemotherapy, a patient may be desperate to find financial assistance. What many people do not realize is that in some cases, life insurance will pay for chemotherapy.

What is Life Insurance for?

The primary function of life insurance is to provide financial support to an insured’s family after his or her death. A consumers pays premiums each month in exchange for a death benefit, or guaranteed pay-out to the chosen beneficiaries after the insured’s death. Depending on the life insurance policy you have, the rules for obtaining the death benefit differ. For example, people with term life insurance policies can only receive death benefits if they pass away during the agreed-upon insurance term. Other policies, like universal life or whole life, last indefinitely.

How to use life insurance to pay for chemotherapy?

If you have a universal life policy, your policy has cash value. This means that for each monthly premium you make, a portion is invested into an interest-bearing account. You can access the funds in this account in order to pay for health expenses or other financial needs. Depending upon the agreements of your policy, you may be restricted to withdrawing certain amounts or only able to withdraw a certain number of times over a time period, but you do have access to the funds in your universal life policy. If you choose to withdraw funds from your universal life policy, bear in mind that you are reducing the total value of your policy; frequent withdrawals from the account will reduce the death benefit pay-out.

Some life insurance policies include a provision for a living benefit. Living benefits are used by insureds who have been diagnosed with a severe or terminal illness, and provide a way to access funds set aside for death benefits in order to provide care. Usually, a living benefit plan is only applicable for certain conditions, so you may not qualify depending upon the type of your cancer. For life insurance policies that do not come with living benefit plans, you can purchase one separately that will work in a similar manner but may cost slightly more.

Even if you cannot qualify for benefits through your life insurance policy to pay for chemotherapy while you are alive, funds from your insurance can be used to pay existing medical bills after your death. If you are concerned about leaving extensive medical bills behind for your family, life insurance death benefits can cover those costs. Because many states are required to provide necessary medical care to all patients, it may be possible to continue receiving care after your health insurance runs out, with the understanding that the bills will be paid at a future point.

The primary function of life insurance is to provide financial security to your loved ones in the event of your death. Some insurance policies offer further benefits, which can be used to pay for healthcare costs such as chemotherapy. If you have recently been diagnosed with cancer or another serious illness, take the time to communicate with your insurance company to see what options are available to you.

Obtain Life Insurance while you are Healthy!

If you are still healthy, now is the time to review your coverage and see what benefits you can use in the event of an emergency. If you are able to add a living benefit to your existing policy at an affordable rate, you may enjoy peace of mind that a serious illness will not destroy your family’s finances. Additionally, if you are able to purchase a universal or whole life policy, you can enjoy more flexible insurance coverage. Whatever you choose, doing research about your life insurance policy in advance guarantees that you are well-informed about your coverage and able to make the wisest decision for you and your family.

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A former insurance producer, Laura understands that education is key when it comes to buying insurance. She has happily dedicated many hours to helping her clients understand how the insurance marketplace works so they can find the best car, home, and life insurance products for their needs.

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Written by Laura Berry
Former Insurance Agent Laura Berry

Dan Walker graduated with a BS in Administrative Management in 2005 and has been working in his family’s insurance agency, FCI Agency, for 15 years. He is licensed as an agent to write property and casualty insurance, including home, auto, umbrella, and dwelling fire insurance. He’s also been featured on sites like Reviews.com.

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Reviewed by Daniel Walker
Licensed Car Insurance Agent Daniel Walker