Many health insurance customers have been shocked to find out when they are diagnosed with cancer that their health insurance policy does not cover them.

Cancer was recently named as one of the biggest health worries of British people by private health insurance provider Bupa. And it could become an even bigger worry for cancer sufferers if their health insurance company refuses to pay out.

As one in three people will be diagnosed with cancer at some point in their lifetime and many types of cancer being easily treatable these days, many health insurance companies now include a clause stating that they will only pay out for terminal or life threatening cases of cancer.

Nowadays, the majority of cancer patients make a complete recovery and medical science has advanced so far in that area that some cancer cases are not even considered as serious in medical terms.

Despite these statistics, cancer is a worrying diagnosis and most health insurance customers would expect to be covered in the event that they are diagnosed with cancer. Alarmingly, many are devastated to find that they are not covered.

However treatable a diagnosis of cancer is considered, it is still a worrying time and no one wants the added stress of discovering that they may have a fight with their health insurance company on their hands.

“People often have no idea that they may not receive any money when they get bad news. Because they've been diagnosed with something serious, they think they can tick a box and claim, but it's not that simple,” says Peter Chadborn, an independent financial advisor.

He advises customers when taking out their health insurance to: "Be careful that you don't focus on cost alone when it comes to [taking out insurance]. You need to be sure that the private medical or critical illness policy you have paid for will pay out when you need it to."

Those with critical illness cover would expect to receive a lump sum of money if they are diagnosed with a serious illness, while those with private health insurance can expect a higher standard of treatment as well as speedier treatment than the NHS could provide.

Often, expensive licensed drugs which may improve your condition can be made available if you have private health insurance, whereas those particular drugs may not have been offered to you on the NHS.

Matt Morris, from independent life financial advice firm Lifesearch, dispells a common misconception, pointing out that more people find that their claim is rejected because their illness is not considered serious than because of failing to mention a pre existing medical condition.

"Around 16 per cent of claims on protection policies fail," says Matt Morris “Of those, at least half are rejected because they don't meet the definition of a severe illness."

"If the illness or disease is severe, the policy should pay out," adds Mr Morris, "But there are some cancers that sound bad but are treatable. That means you probably won't get any money from traditional policies."

A situation where this might be the case could be in the diagnosis of a localised, slow growing cancer, for example, non life threatening skin cancer. In this instance it is unlikely that those with a typical policy would receive a payout.