Many small business owners worry about what happens to their livelihood if they or a key member of their staff gets sick. It’s one of the reasons why companies take a closer look at how cancer insurance works.
Key takeaways
- Cancer insurance is a supplemental policy that provides a financial safety net for costs not covered by standard health insurance
- Offering this as a voluntary benefit can improve employee retention and provide peace of mind for the whole team, and can also be employer-paid
- Benefit payments go directly to the policyholder, helping cover non-medical expenses like travel, lodging, or replacing lost income
In this guide, we discuss what cancer insurance is, what it covers, and how it works for both you and your employees.
What is cancer insurance and how does it work?
Cancer insurance is a specialized, supplemental health insurance policy. It isn’t meant to replace a primary health plan; instead, it complements it by providing cash specifically for cancer-related expenses.
In a nutshell, if a policyholder is diagnosed with a covered cancer, the insurance company pays a benefit directly to them. Unlike regular health insurance, which pays doctors and hospitals for specific medical codes, cancer insurance gives the individual a check they can use for anything — from medical co-pays to mortgage or car payments while they’re unable to work.
Primary health insurance vs. cancer insurance
To see how these two work together, it helps to look at who gets paid and what the funds cover.
| Feature |
Primary health insurance |
Cancer insurance |
| Who gets paid? |
The doctor or hospital |
The policyholder |
| What does it cover? |
Specific medical treatments and prescriptions |
Any expense (medical or personal) |
| Benefit type |
Variable (based on bill) |
Fixed (lump sum or indemnity) |
| Deductibles |
Usually required |
None |
| Use of funds |
Restricted to medical care |
Flexible (rent, groceries, travel) |
Now that we better understand the purpose of this coverage, let’s see why it’s on companies’ radars.
How does cancer insurance complement your primary health plan?
Think of your primary health insurance as a “medical” safety net and cancer insurance as a “financial” safety net. Your health plan handles the billing between the hospital and the insurance company. Cancer insurance ignores the hospital and focuses on the policyholder. This relationship ensures that while doctors are getting paid, the household stays afloat.
How are premiums paid?
These voluntary benefits are typically paid by the employee. By using payroll software to manage deductions, contributions are made each pay run automatically — ensuring coverage stays active without extra administrative work for your team.
Why consider cancer insurance? Value for employers and employees
For a small business owner, this can be a very powerful perk for your team. Attracting and keeping top talent is a top priority for many small businesses.
It shows you care about their well-being beyond just their output, which can build loyalty. Because these are often employee-paid (voluntary) benefits, it’s a way to enhance your benefits package without adding to your company’s direct insurance premiums. Offering cancer insurance as a voluntary benefit allows your employees to opt in to extra protection at group rates.
Moving on, let’s find out more about what a policy generally helps with.
What does cancer insurance typically cover?
While “regular” insurance pays for the surgery, cancer insurance helps a family manage the rest of their lives. These policies often include benefits for:
- Lump-sum payouts: A one-time payment upon diagnosis
- Hospitalization and treatment: Daily benefits for chemotherapy, radiation, and surgery
- Non-medical costs: Coverage for transportation to treatment centers and lodging for family members
- Living expenses: Because the money goes to the individual, it can be used for groceries, utility bills, or other household needs as they see fit
Key features and types of cancer insurance policies
When comparing plans for yourself or your staff, you’ll generally see two main types:
- Lump-sum plans: These pay a fixed amount (e.g., $20,000) immediately upon diagnosis
- Indemnity plans: These pay out specific amounts based on the treatments received (e.g., $500 per radiation session)
You should also keep an eye out for waiting periods. Most policies have a 30- to 90-day window after purchase during which a diagnosis will not be covered. This prevents people from buying a policy only after they suspect they might be ill.
Looking for more ways to support your team?
Supplemental policies are a great way to offer extra protection at little to no cost to your business. Learn how to round out your perks with other voluntary benefits for employees.
Is cancer insurance right for your business?
To decide if this coverage aligns with your needs, here’s a few factors to consider:
- Team demographics: If you have a diverse team, offering specialized supplemental coverage can be a major differentiator in your hiring
- High-deductible plans: If your company offers a high-deductible health plan (HDHP), cancer insurance is an excellent way to help employees “fill the gap” of that large deductible
- Business continuity: Do you have a key person whose absence would cripple the business? This coverage provides the financial buffer to navigate that transition
Call OnPay’s team of licensed brokers can help see if this is the right fit for your business.
Understanding the cost: What affects your premiums?
Cancer insurance is generally affordable, especially when purchased at group rates through a business. Premiums depend on a few key factors:
- Age: Typically, it’s cheaper to lock in a rate when you or your employees are younger.
- Benefit amount: In most cases, a $50,000 lump-sum policy will cost more than a $10,000 policy.
- Tobacco use: Using tobacco significantly increases the risk and the premium.
Trusted by small businesses
“OnPay has really been a really blessing for our business. It makes me and the company feel secure we are doing the best by our employees regarding payroll, taxes and benefits. Glad we use them and will make sure I will share it with other companies!”
— JJ McKay, The Fresh Toast
Choosing the best policy for your needs
- Assess your current benefits: Review your existing health and life insurance to find gaps
- Look for group options: See if you can offer this through your payroll provider or an insurance broker to get better rates for your team
- Check for pre-existing condition exclusions: Most policies will not cover a cancer that has already been diagnosed
- Evaluate the carrier: Look for companies with high financial strength ratings to ensure they can pay out when needed
Remember, these are all points you should discuss with your broker.
Bottom line: Cancer insurance is worth a closer look
Finding the right balance of coverage and cost shouldn’t be a heavy lift. At OnPay, we want to help you protect what you’ve built. You can explore different options and get a personalized quote that fits your budget and your business. By taking proactive steps today, you can focus on what matters most: your health, your team, and your business growth. Our team of benefits brokers at OnPay can help you understand what’s available and how it fits into your overall benefits administration strategy.
