Cancer-only cover a first for Pinnacle

The first ever cancer-only insurance policy is being offered by online insurance provider Pinnacle Life.

The insurance, which is aimed at younger to middle-aged consumers, is a form of stripped-down trauma insurance and is part of Pinnacle's bid to win price-conscious policyholders from the big insurers which dominate the market.

Trauma insurance pays out a lump sum to policyholders on the diagnosis of a prescribed list of diseases and afflictions such as heart attack, stroke and cancer, but Pinnacle Life director Ed Saul said around 80% of all trauma claims are for cancer.

"Typically, over 85% of trauma claims paid out by insurers relate to just three conditions – cancer, heart attack and stroke – and if you break this down further, 80% of these claims relate to cancer," said Saul.

But that does not tell the whole story for the target market, said Saul, as heart attacks and strokes are not generally a risk many people under the age of 45 want to cover themselves for.

"Whereas heart attacks and strokes are more generally associated with age, cancer can strike anyone at any time, so we believe cancer cover presents a more scary risk for younger people aged 20 to 45. For this demographic, cancer is far and away the highest risk," said Saul.

"There are many healthy 30-year-olds who don't want to pay to cover heart attacks, Alzheimer's, chronic lung disease, because they see these as very low risk."

The "unpacking" of the trauma cover is part of an insurance industry-wide trend designed to make insurance more affordable by reducing cover.

The limited scope of the cover does save a packet in premiums. A 40-year-old non-smoker in good shape with limited history of cancer in the family buying the cancer cover would pay $19 a month for $100,000 of cover ( $31 for smokers). Compare that to the $37.55 they'd pay for ING Life's trauma cover through online insurance retailer iProtect. But those buying the cancer cover need to understand what they are not covered for. ING Life's trauma insurance covers 48 diagnosed conditions including such unpleasant maladies as major burns, HIV, Parkinson's, benign brain tumours, liver or kidney failure and the losses of sight, limbs, speech, or hearing.

While the state health system picks up the tab for cancer treatment – some medical insurance policies provide some private cover – the impact of cancer can be financially devastating, said Saul.

Pinnacle's cancer policy, which can provide cover of up to $250,000 and is backed by giant global insurer Hannover Re, would provide a lump sum for people to spend on whatever they liked after the diagnosis of cancer, and people could use it to do anything they wished, such as taking the trip overseas they always dreamt of, to being able to take some serious time off work to focus on fighting the disease.

Advances in medical technology mean cancer is now being spotted earlier and earlier, so people are generally living longer with cancer, calling for greater financial resources. That's just as well because if the policyholder dies within 14 days of being diagnosed, they will not be paid out.

"That's where our new cancer product fits in," said Saul. "It provides a lump sum to ease your life financially, if you are diagnosed with cancer and continue to live."

The presentation of scary figures to the public by insurers is known in the industry as "parking the ambulance outside the door", but the cancer stats are bracing.

Cancers accounts for around 30% of deaths in New Zealand, with one in six people diagnosed aged between 30 and 64. For women, breast cancer is the biggest cancer killer, with one in nine diagnosed during their life.

Lung cancer is the biggest cancer killer of men, accounting for 21% of male cancer deaths. Prostate cancer is more common, but doesn't kill as many.

- © Fairfax NZ News