Cancer Indemnity Insurance: To hedge or not to hedge? (Part I)

We're all aware of the honking, hapless but determined duck from the Aflac commercials. He risks life and limb to add the company name to an otherwise oblivious human conversation about insurance.

Calling it "a clever successor to the ad jingles of the fifties and sixties," an influential advertising blog says, "No matter how you feel about these spots, it is very hard to argue that they’ve taken an unknown company and made it a household name."

THE LAUNCH OF A COMPANY AND CHEMOTHERAPY

Aflac (American Family Life Insurance Company) has been around since 1955, and three years later its first major product offering arrived: a highly original disease-specific health coverage—the first cancer indemnity insurance, meant to help you financially in case you developed cancer one day down the road. In that first year alone almost 6,000 Americans took them up on the offer.

It was a smashing success, but much is owed to timing: In 1955, seven years after Sidney Farber published his groundbreaking NEJM paper outlining success against leukemia using a folic acid antagonist called methotrexate, the US Congress established the Cancer Chemotherapy National Service Center. Researchers then began, almost literally, to submit in vitro cancer cells to several thousand different chemicals, to see what killed what, and how.

So the launch of cancer-specific insurance coincided with the modern chemotherapy movement. This is clearly no accident, nor an example of serendipity, but despite the temptation, I don't think there's anything outlandishly nefarious about this—or at least anything more nefarious than the motivations behind any other insurance policy.

THE COST OF CANCER

Unfortunately, cancer treatment in the US can be, and often is, financially devastating to a patient and his or her family. Quite often I read about families that literally go broke trying to pay for the constellation of associated out-of-pocket costs.

So I decided to call Aflac and pretend to be interested in buying such a policy.

To be continued in the next part …