Does Life Insurance Cover Cancer?

Cancer is the No. 2 cause of death in the United States, according to a 2017 report by the Centers for Disease Control and Prevention. So, “Does life insurance cover cancer?” is a common question. And the good news is that most life insurance policies do in fact pay if your death is caused by cancer.

How life insurance policies are designed

Insurance companies consider cancer a natural cause of death, which is what comprehensive life insurance policies (term and whole life) typically cover.

But there’s an important distinction between traditional life insurance and accidental death and dismemberment, or AD&D, policies. Both types of policies provide death benefits, but accidental death policies typically only pay out if you pass away from an accident, such as an auto accident or drowning. Accidental death and dismemberment polices most often are not meant to cover death by illnesses such as cancer. If you want to help ensure that your family is protected in case you pass away from cancer, you should look into a comprehensive term or whole life policy.

Exceptions for cancer coverage in life insurance policies

There are two main exceptions that might affect the life insurance policy’s death benefit related to cancer:

  • False information in the application for life insurance. For example, if a heavy smoker claimed to have never smoked, or someone failed to disclose a history of cancer, the policy might be subject to investigation by the insurance company. If the company determines that false information was provided, it might cancel the policy. In the event of the policyholder’s death, the company might deny the death benefit entirely or reduce the payout.
  • If you have a graded-benefit life insurance policy. This type of policy pays a lower death benefit in the first few years of coverage, so if you were to pass away from cancer — or other causes — in those first few years, your loved ones would not receive the full policy benefit amount.

Get more information on the basics of life insurance.