I’m looking to take out Life Insurance and have read about an additional benefit called Terminal Illness, can you tell me what this means and is it the same as Critical Illness Insurance?
Terminal Illness Benefit Explained
Terminal Illness Benefit pays out the Life Insurance lump sum early if the policyholder is expected to die within 12 months. It is often included as standard with a Life Insurance policy at no extra cost.
For Joint Life Insurance policies, Terminal illness benefit applies to both lives but most providers will only pay out once when the first life assured is diagnosed as suffering from a terminal illness.
If decreasing life cover is chosen, then the Terminal illness benefit will also decrease in line with the life cover over the policy term.
Terminal illness benefit is unavailable on policies with a one year term.
If after a claim is paid by the insurer, if you do in fact survive for longer than 12 months, the insurer won’t ask for any payment made to be paid back to them.
The difference between Terminal Illness Benefit and Critical Illness Insurance
Terminal Illness benefit is often confused with Critical Illness Cover (which can be added to your life policy at an additional cost). However, they are both different.
Terminal Illness Benefit will only pay if you are diagnosed with an illness that leaves you with 12 months or less to live, whereas Critical Illness Cover pays out a lump sum on a set number of conditions, the majority of which don’t have to be terminal.