Money matters
You need to check your existing life insurance policy if you are diagnosed with cancer. Or make sure that a new policy suits your needs.
Many of us have life insurance because we take it out when we get a mortgage. The point of having the life insurance is that if we die, it pays out to cover the mortgage.
Life insurance is useful for two main reasons:
if you die it can pay off debts - such as a mortgage
it can pay out money for your family after you die
Some life insurance policies include terminal illness cover. This means if you are diagnosed with a terminal illness and have less than 12 months to live, you can make a claim. The insurer will pay out the money straight away. You can keep the payout even if you live longer. Check with your insurer to see whether this is included in your policy.
If you are diagnosed with a critical illness, some life insurance companies will also pay out. Check with the insurer.
If you have or have had cancer, you may find it more difficult to get life insurance.
The insurance companies take certain factors into account if you’ve had cancer. These include the type of cancer you have and the stage it is at.
With your permission, the company will write to your doctor or hospital. They will ask for medical details that could affect your policy. They might also ask you to have a medical examination before they will issue your policy.
When a policy is issued, the first premiums will be high. Because that’s when the insurance company has the greatest risk. For most cancers, as time goes by the risk of the cancer coming back gets lower.
Talk about your individual case with your life insurance company. They can tell you more about how this will personally affect you.
There are special rules about insurance in the Disability Discrimination Act (DDA). This Act applies to you if you have cancer, or have had cancer in the past.
You might already have a life insurance policy from before you were diagnosed with cancer. The insurance company should honour this policy, as long as you were honest about your medical history when you took the policy out. Your policy could change, and for a short while you might need to pay more every month. But if you do not tell your insurer about your cancer diagnosis, then your insurance company might not pay out later.
Depending on your cancer diagnosis and the cover you have, you may be able to make a claim. To do this, you have to contact your insurance company. Make sure you read your policy before making a claim. Making a claim could increase your monthly payments, or your insurance company may make changes to your policy.
You might find it difficult to increase the value of your policy for some years. But it’s important to keep it. That will be easier than starting a new life insurance policy after your cancer diagnosis.
You may want to increase your cover. Ask your adviser about using a 'special event option' and how much they charge for this. This means you can increase the cover, subject to certain events happening in your life. This includes the birth of a child, marriage or moving house.
If you are thinking of buying life insurance, talk with an independent financial advisor or insurance broker. They will help you get the right insurance for your situation.
Check our useful organisations to find out more about where to find a independent financial adviser
There are different types of life insurance including:
Term life insurance
This is the most basic type of life insurance. There are 3 types of term life insurance:
Level term insurance - this type of insurance pays a fixed amount to your loved ones, should you die within the term of the policy. The amount paid out is fixed at the start of the policy and does not change.
Decreasing term insurance - with this type of insurance the payout your loved ones would receive decreases over time. This insurance is often taken out with a mortgage.
Increasing term insurance - this type of insurance means that the amount paid out increases over the course of the policy. This is usually in line with inflation.
This type of policy is ongoing and covers you for the whole of your life. These policies can be more expensive. Whole life insurance pays out a lump sum at whatever age you die.
Family income benefit is a type of life insurance which will pay out a regular income to your loved ones if you die, rather than a one off lump sum payment. If you die after the policy has finished, your loved ones will not get monthly payments.
An endowment policy is a long term investment product that also includes a life insurance policy. You pay in a monthly amount for a set term and get a cash lump sum at the end of the policy, or if you die. Part of the premiums you pay will be invested - such as in shares or property. The value of the investment can go up or down.
When you're choosing your life insurance, be very careful that the policy is right for you and your family. Review the insurance regularly to make sure it’s keeping up with your changing personal and financial circumstances.
Life insurance is a long term commitment. Never surrender (give up) a policy without taking expert advice.
Complain to the broker, financial adviser or salesperson who arranged your policy if you’re not happy with the service you’ve been given. Your policy document will have details of the complaint procedure.
If you can’t get your complaint sorted out at this level, you can contact the Financial Ombudsman Service.
Go to the Financial Ombudsman Service website
Or you can contact the Financial Conduct Authority (FCA). These services are free to the public.
Last reviewed: 04 Sept 2024
Next review due: 04 Sept 2027
A list of organisations who can give you financial help and advice on issues such as mortgages, pensions and loans.
Being diagnosed with cancer doesn’t mean that you can't get a mortgage. But a lender needs to know that you can pay back the loan.
Health insurance can be harder to get if you have cancer. You will need to check with the insurer whether cancer is a medical condition that they cover.
You might earn less when having cancer. But there are government benefits that you might qualify for if you have cancer or care for someone with cancer. There are people who can advise you about your financial situation and help you apply for benefits.
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