The American Cancer Society estimates doctors will diagnose over 1.4 million new cases of cancer in the U.S. in 2007, with more than 559,650 cancer-related deaths. If you are among the majority of cancer patients and survive for at least five years following your diagnosis, you may face another fight: buying life insurance.

Buying life insurance for cancer patients is challenging, but not necessarily impossible. Your chances for securing a policy depend greatly on the type, stage and grade of the cancer, and even on the treatment plan. There is a relationship between the rate you’ll receive and the curability of your cancer. Certain types of skin cancer, for example, are considered very low risk by life insurance companies and a skin cancer history may not even impact premiums.

Applicants with common and treatable forms of breast and prostate cancer may be able to get a “standard” rating under ideal circumstances. But patients with a history of leukemia or colon cancer may fall into a “substandard” or “high substandard” rating at best, or receive declines. Anyone with cancer that has metastasized likely won’t be able to obtain a policy.

Dr. Charles Levy, senior vice president and chief medical director of AIG American General Domestic Life Insurance Cos., says, “We’re better and better able to differentiate the risks of individual cancers.” Life insurers like AIG American General have sophisticated tables to determine premiums, where they can factor in cancer types and treatments. The end result is better premiums because applicants aren’t lumped together as an “average.”

Most insurers will not offer a policy to someone who is still undergoing treatment for cancer. Depending on your type of cancer, the life insurer may also want to add a surcharge, also called a temporary flat extra. For example, AIG American General sometimes charges temporary flat extras for two to five years, depending on the applicant’s cancer and treatment. The good news is that although these extra premiums can be expensive, they will automatically disappear after a set period of time.

Cancer insurance risk specialists

While a dedicated life insurance agent will search cancer insurance companies to find insurers that will sell you a life insurance policy, in some cases you may be better off seeking out a broker who specializes in finding life insurance for people who have a history of cancer.

These brokers will know the specific questions underwriters will want answered when considering your application. Many brokers have developed relationships with several insurers, so they know which companies offer the best-priced life insurance policies for cancer survivors. Some brokers have experts who specialize in gathering your medical records and organizing them.

By directing your application to life insurers that will view your application most favorably, these brokers will help you find the most accurate price quotes and the lowest premiums for life insurance. Always check the financial strength of the insurer before you buy any policy and be sure that the agent or broker you choose is licensed in your state.

Life insurance strategies for cancer survivors

If you are a healthy cancer survivor, life insurance is even more feasible. There are things you can do to ensure you’re getting the best premium offers possible for your situation.

1. Gather all possible medical records before you apply, from the first pathology report to medical records to treatment records. That ensures medical underwriters have the most complete picture of you, your health, and your cancer history. Having all those records before you apply for cancer insurance will reduce delays in your application process, because your life insurer is going to request them and will wait for them. The information you provide can garner you better premiums in the end: The less life insurer underwriters knows about you, the more likely they are to have to assume you are the highest risk and offer you high premiums accordingly. According to Levy, “If it’s fuzzy, we’re more likely to err on the side of conservatism.”

2. Make sure you have complied with your doctor’s treatment plans. For example, says Levy, if your doctor asked to see you back in one year and you haven’t been back in four years, get to your doctor for your check-up before you apply for life insurance. Your life insurer is not going to offer you a policy without before seeing the results of that check-up. Similarly, if you’ve had breast cancer and you’re due for a mammogram in December and you apply for cancer insurance in October, your life insurer will likely wait for the results of your next mammogram.

3. Get prices from several companies. Policy costs can vary a great deal among companies.

4. See if you can get group life insurance through a professional, fraternal, membership, or political organization to which you belong.

5. Consider a “graded” policy (one with limited benefits) if you cannot get full death benefits. In the first few years of a graded policy, the company pays only the premiums and part of the face value if the insured person dies of a condition, such as cancer, that existed before the policy took effect. If the insured person dies after the specified grading-in period, the company will pay the full face amount of the policy.

If your cancer has been successfully treated, and you are otherwise in good health, you can likely obtain a cancer life insurance policy. If you can show that you are healthy and your treatments have gone well, several insurers may compete for your business.

The publication of a parliamentary bill could do away with a law that punishes insurance claimants for honest mistakes

An archaic law that means thousands of insurance claims each year are unfairly rejected by insurers could be overturned following the imminent publication of a parliamentary bill.

Claims made on motor, travel, household and health policies are routinely turned down by some insurance companies under an anomaly in the law, which dates back to 1906 and puts a “duty of disclosure” on the policyholder.

This means policyholders are expected to disclose not only things they have been asked for, such as known medical conditions, but also things that they haven’t which could later turn out to be significant. So, someone who is diagnosed with throat cancer, for example, could see their health insurance claim rejected if they had failed to mention a past visit to the doctor for a sore throat when they applied for the policy – even when the doctor prescribed nothing more than a few days’ rest, and the question was not asked by the insurer.

Claims are also turned down when householders accidentally get information wrong. A common example is when applying for household insurance, where the question “Are the locks British ’safety-standard’, a five-lever mortice lock conforming to BS3621, or a cylinder rim deadlock?” is commonly asked. Not surprisingly – especially since a householder would often need to take the lock out of the door to find out – it is often answered wrongly. Yet, if a householder claims on their policy, even for something unrelated to locks, such as a fire, they could find their claim rejected.

Consumer groups, health charities and many insurance companies have long called for a change to the law, saying that it is unclear and unfair.

“At the moment, the obligation is on you, the consumer, to disclose all the facts that might have an effect – decisive or not – on the mind of a prudent underwriter in assessing the risk,” says Peter Tyldesley, a lecturer at the University of Manchester and insurance law specialist. “This is setting consumers up to fail.”

After years of consultation on the issue, on 15 December the Law Commission will present a draft bill to parliament that should spell the beginning of the end to these often disastrous discrepancies in the law.

The Observer understands that the bill will propose the law is changed to abolish the duty of disclosure – volunteering information without being asked – to providing only the information asked for by insurers. It will also propose changes to the way insurance companies deal with policyholders when they get something wrong. So, for example, if a policyholder makes an innocent mistake, they will have their claim paid in full and if they are “careless”, rather than reckless, they should get a proportionate payout. If, for example, they have only paid half the premium which would have been charged had the underwriter known the true facts, they may receive a payout of only half the amount of their loss.

“The issues of non-disclosure and misrepresentation have been running for many years,” says Tamara Goriely of the Law Commission. “We think the law needs to be changed so that it is clear, accessible and easy to understand.”

At the moment, around 1,000 insurance cases a year involving non-disclosure end up with the Financial Ombudsman Service, which often then rules in a policyholder’s favour. The vast majority of these claims are for large amounts of money, says the Law Commission, often involving people going through a particularly vulnerable time such as dealing with a cancer or MS diagnosis.

“We’ve always had a broader view of disclosure than the courts,” says an FOS spokesman. “If the insurer hasn’t been specific enough in its questions, for example, we might rule in the consumer’s favour.”

Marketing consultant Inga McVicar had to turn to the FOS in 2007 when she was diagnosed with ovarian cancer but found herself unable to claim on her critical illness insurance policy. Her insurance company turned down her claim over a discrepancy in her answers on the initial form, which was due to an error by her financial adviser.

As soon as she realised the error, says McVicar, 33, she told her insurer but it treated the policy as if it had never existed. “What shocked me more was the horrific way my insurance company dealt with me over it,” she says. “They branded me a liar, failed to return my calls and, to add insult to injury, in a letter to me referred to my diagnosis as breast cancer not ovarian cancer.”

By February 2008, McVicar had to return to work as she is self-employed, despite the fact she was undergoing chemotherapy. “To add to this, the anomaly in my policy the insurer was referring to didn’t remotely relate to my diagnosis and it turns out even if I had answered that one question correctly I would have been covered, albeit with increased premiums,” she says.

Macmillan Cancer Support provided Inga with a grant to help with her basic needs while she took her case to the Financial Ombudsman Service. The ombudsman ruled in her favour, agreeing that it was a genuine mistake. She got a payout of £46,000 and is now in remission from the cancer.

Many insurers do not apply the letter of the law, taking a more reasonable approach to claims. However, a minority do apply it rigorously.

A spokesman for the Association of British Insurers, said: “We don’t believe there is any need for intervention as far as non-disclosure is concerned. Where there are areas of concern, we believe these have been addressed. We have introduced a code of practice for critical illness insurance and the number of complaints has reduced significantly.”

However, progress has not been made in other areas, says Goriely. “In household, motor and travel, particularly where the claim relates to a medical condition, there is no evidence that [disputes over non-disclosure] have dropped off.”

“We think it’s ridiculous that consumer insurance is based on an archaic law from 1906,” says Phil Jones, public affairs officer at Which?

“The Law Commission report is an excellent opportunity to address this issue so we urge all political parties to support the bill.”

■ Have you had a claim refused for non-disclosure, and did you resolve the issue? Would you support a change in the law? Email us at cash@observer.co.uk or write to us at Cash, The Observer, Kings Place, 90 York Way, London, N1 9GU.