When you see friends and relatives struggle through cancer treatment, you might wonder how you would deal with a similar diagnosis. Could you afford to pay for doctors and medicine, or maybe even go abroad for treatment?

Is cancer insurance right for you?

Types of cancer insurance policies Expense incurred: Pays a percent of all expenses listed in the policy up to the policy's maximum limit. Indemnity: Pays for specific benefits listed in the policy but places a fixed dollar limit on the total payout. First diagnosis or first occurrence: Pays a lump sum upon diagnosis. This could range from $2,000 to $100,000. Benefits cannot be denied due to a pre-existing condition if the cancer is diagnosed after the policy's effective date and waiting period. This type of plan may have lengthy waiting periods. Source: North Carolina Department of Insurance

The Wisconsin insurance department advises asking the following questions if you shop for cancer insurance.

• What does the policy pay for? A good policy will pay for hospital stays, medicine, surgery, doctors' visits, radiation treatment and chemotherapy. Make sure you understand what is excluded.

• Does the policy offer increased benefits after an extended hospital stay? Some policies might promise increased benefits after a lengthy hospital stay (longer than 90 days). But according to the Wisconsin insurance department, the average hospital stay in relation to cancer is 13 days.

• Are cancer-related illnesses covered? Cancer, along with its treatments, can lead to other physical problems, such as infections, diabetes and pneumonia. Most cancer policies do not cover treatment for these illnesses.

• Will travel expenses be covered? Often, cancer treatments require travel to a hospital hundreds of miles away. Not all cancer policies will cover travel expenses, but some will cover not only the travel of the patient but also of companions.

• Will your medical policy pay duplicate benefits? While most cancer insurance policies will pay even if you're already getting health coverage under another policy, the reverse may not be true. Some major medical policies won't pay out if you hold other coverage, such as cancer insurance.

• Is there a waiting period? Know how long you have to wait after a diagnosis before coverage kicks in. It could be 30 days or longer. Also find out if there is a maximum time period for coverage.

How does it work?

Cancer insurance policies may be purchased individually or, in some cases, through your employer's benefits program. You won't be able to buy a cancer policy if you already have cancer. An insurer may also charge more on the basis of your lifestyle or family health history.

Most cancer insurance policies pay out a lump sum benefit upon diagnosis. Some of them continue to pay for certain expenses, but others provide simply a one-time lump sum and then coverage ends.

Your premiums will be more expensive if you want a larger lump-sum payment or if you want the rest of your family to be covered. Your premiums may also increase as you get older.

According to recent estimates by the Wisconsin insurance department, hospitalization for cancer accounts for about 78 percent of cancer-treatment costs and 13 percent goes toward physician services. The rest goes to other professional services, drugs and nursing home care. There are additional nonmedical expenses such as transportation and rehabilitation.

A "good buy"?

Opinions differ on whether or not cancer insurance is a "good buy." According to the Consumer Federation of America, you're better off buying comprehensive medical insurance coverage and disability insurance to help pay for medical care and time lost from work due to any serious illness or injury. Cancer insurance is not a substitute for a health insurance plan.

But in the event of a cancer diagnosis, a cancer insurance payout could open up a variety of treatment and travel options that you perhaps wouldn't otherwise have been able to afford. Whether it's a "good buy" is ultimately up to you.

Another option is a critical illness insurance policy. This kind of policy provides a lump sum payment for a variety of conditions, from cancer to stroke to burns.

Basic health insurance is the first line of defense

Early detection and diagnosis are crucial to cancer survival. Cancer insurance won't help with detection and diagnosis. Research shows that those who have health insurance are more likely not only to have early cancer detection but also a greater survival rate.

For example, according to U.S. Agency for Healthcare Research and Quality data from 2006, at least 20,000 of the nation's 560,000 annual cancer deaths are uninsured patients. Researchers checked previous medical records for five years and found that the uninsured were 1.6 times more likely to die in less time than those who were covered by private insurance. Those who had less access to and use of cancer-screening services and other preventive care were at a higher risk, in addition to failing to seek follow-up after an abnormal screening result.

The American Cancer Society notes that slightly less than one in two men and slightly more than one in three women will contract cancer during their lives. This means one in two men and two in three women don't.