Claiming life insurance for a terminal illness

Claiming life insurance for a terminal illness

26 Apr 2022

No one wants to plan for getting sick and passing away, but that doesn't make it any less important. Some people choose to put away savings, some put their money in property, some people invest in life insurance, some people try to lead the fittest and healthiest lives possible. But however you choose to plan for the future, it doesn't change the fact that it's out of our control.

If you were diagnosed with a terminal illness, what would happen to your loved ones? Would they be able to continue living the lives they love without your income or your presence in their lives? If the answer is no - which, let's face it, it probably is - then you might be curious about how life insurance can help you if you get diagnosed with a terminal illness. Let us break it down for you.

Can I claim on my life insurance with a terminal illness?

Life insurance is usually paid as a tax free lump sum after death. If you want cover against illness whilst you're alive, considering types of cover like Critical Illness Cover and Income Protection may be a good idea, as these are designed to protect you if you fall ill. However, that doesn't mean your life insurance definitely won't protect you if you get a terminal illness.

Terminal illness benefit is a feature of some life insurance policies - usually 'term' life insurance - where the policy lasts for a pre-agreed number of years. This benefit is included as standard in some policies, but other insurers will add it on as an optional extra you can pay a little more for. Whilst it's usually a benefit on term life insurance policies, it can be added onto decreasing policies (where the amount you'll receive as a payout decreases over time) or joint policies too. However, it's worth remembering that there will be some limitations here: for instance, most joint policies only pay once, and the benefit on a decreasing term policy will of course decrease over time.

The idea of this kind of benefit is that you can use the pay-out to get your affairs in order before you pass away, instead of this falling on the shoulders of your loved ones.

Most insurers will pay out the total amount of cover provided on your policy - otherwise known as the 'sum insured'. Once this benefit is paid, the policy is over and there won't be any more payments, even when you pass away.

There is no obligation to make a claim once you've been diagnosed though. If you prefer, you can allow your policy to run until after your death and let it pay out then as normal. You might prefer this if you want to leave the full lump sum to your loved ones after you pass away.

Keep in mind though how much more comfortable and less stressful that money could make your last few months, especially if you have to stop working. Claiming this payout gives you the freedom to live your last few months without financial strain in an already difficult time.

What terminal illnesses are covered?

Each insurer likely has a specific criteria for what conditions must be met before they will pay out, but it tends to be commonly agreed that a terminal illness is an illness that a medical expert has determined you will pass away from within a year.

Some examples of terminal illnesses you may be covered for are:
  • Advanced cancers
  • Dementia
  • Parkinson's disease
The best way to know what you'll be covered for is to speak to your insurer, read your policy documents or go through an experienced broker.

How can I make a claim?

To claim on your terminal illness benefit, you usually have to provide proof of your diagnosis to your insurer. The insurer needs to be satisfied that you are likely to pass away within a given period of the claim being made. This period is usually 12 months and they may also ask for a 2nd Doctors opinion.

Never fear though - if your claim is approved and you then get lucky and live longer than 12 months, you don't owe any money to the insurer. That money is yours.

How can LifeSearch help me?

Here at LifeSearch, we believe that everybody should have access to cover when they need it. When you get seriously ill, the last thing you want is to feel like you're up the creek without the paddle when it comes to your finances.

If you're worried about falling ill and having no cover, get in touch and let us help you figure out what kind of policy covers you the way you want to be covered.

Let us get to know you and do the hard work for you

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