If you are suffering from a terminal illness, some life insurance policies will pay the amount of cover provided by your policy immediately.
An incurable disease is one from which, according to a doctor, the victim will never recover and is likely to cause death within 12 months of diagnosis.
The terminal illness benefit payment is meant to make it easier for the policyholder to plan for their families and loved ones as well as provide funds for use in the remaining months of their life.
Once paid, a life insurance policy with terminal illness benefit will not make any further payments after the death of the policyholder – it only carries forward the payment that would have been made after their death.
Terminal illness benefit is not the same as critical illness cover. The latter is meant to support a policyholder diagnosed with a critical illness that will affect their quality of life, but which will not directly result in their death.
Examples of conditions that qualify for a terminal illness benefit payment include Parkinson’s disease, dementia and advanced cancer. However, each life insurer has different criteria for payment.
Claiming a terminal illness benefit requires providing proof of your diagnosis to your insurer’s chief medical officer. The insurer must be satisfied that your death will occur within a certain period of time after your claim – usually 12 months.
If a policyholder does not die within the agreed time frame after successfully making a claim, they will not have to pay anything back to the insurer – but neither will they receive any payment from the policy after their eventual death.
Some terminal illness benefit claims are turned down when they are made in the last months of the life insurance policy term, i.e. the policy is about to expire before the policyholder is expected to die.
If you are suffering from a terminal illness and your life insurance cover provides terminal illness benefit, you are not bound to make a claim. If you wish, you can wait for the policy to pay out normally after your death.
However, terminal illness benefits can make things easier in your final months – especially if you are unable to work and need your income to pay your mortgage, rent or other commitments. Any money spent during this time will certainly mean there’s less to leave behind once you’re gone.
If your life insurance policy is arranged on a ‘decreasing’ basis – that is, it is set to pay less with each passing year – then your terminal illness benefit will decrease at the same rate. With joint life insurance policies arranged for a couple, insurers will usually pay terminal illness benefits only once, usually as and when the first diagnosis is made.
Some people are eligible for state assistance if they are diagnosed with an incurable disease. For more information about support, see government website,