July 12, 2011


Our guest asks:

My brother-in-law was diagnosed with cancer at a young age and it wiped out their entire life savings even though they had good health insurance. He is still alive but they are worried about their financial future. What can we do to protect against this?

OnlineAdviser responds:

A diagnosis of cancer or other critical illness signals the beginning of a financial battle as well as a health battle. An extended cancer treatment typically leaves a patient with $10,000 or more of uncovered expenses (in addition to the loss of income) regardless of the type of medical insurance.

Advance planning can help to reduce the risk. Our laws also allow some limited protection of assets in the event of a catastrophic medical expense event like this but you must take these steps before receiving a cancer diagnosis. Those who wait cannot make effective plans to manage the financial burden.

The US Department of Health and Human Services offers this advice about the importance of advance screenings:

"Cancer is scary, but advances in detection and treatment over the past 30 years have made it less scary for some of the most common cancers. At the Centers for Disease Control and Prevention, researchers track data on cancer. The CDC’s Arica White says people thought that a cancer diagnosis was a death sentence, but it’s not necessarily true: Persons living with a history of cancer are now described as cancer survivors, rather than cancer victims, with almost 60 percent of people living five years after they were diagnosed.’ Screening tests can help to spot cancers early, when they can be best treated. White’s study, in collaboration with the National Cancer Institute, was in CDC’s Morbidity and Mortality Weekly Report. Learn more at www.hhs.gov ."

Battling cancer does cost money not covered by insurance. Some states allow supplemental critical illness insurance. These policies typically cost between $30 to $150 per month and add an additional cash insurance benefit of $10,000 to $50,000 in the event of a cancer diagnosis. Strokes and other critical illnesses are also covered).

So far, this coverage is available from well-known UnitedHealthOne to everyone living in Michigan, Missouri and Ohio. Other reliable and affordable supplemental insurance options are expected soon.

Like any insurance, it only works if you enroll BEFORE you suspect a problem. 

Beyond these two measures, you should speak privately with a financial adviser who is experienced in protecting assets from medical claims. This is an important financial topic that cannot be adequately addressed in a brief public format like this.

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