Understanding Terminal Illness Insurance: A Comprehensive Guide

Terminal illness insurance is also known by several other names, including “accelerated death benefit” in the United States. This type of policy is paid out if the policyholder has a terminal illness from which he is expected to die within 12 months of being diagnosed.

In order to qualify for payment, the policyholder must be diagnosed by a physician with a specialization in the patient’s disease.

In many cases, terminal illness insurance is added to a mortgage life insurance or traditional life insurance policy. Contrary to popular belief, purchasing terminal illness insurance coverage as a separate policy is not possible. It must be combined with another policy, such as life insurance.

Payment of Benefits

If a person has both life insurance and terminal illness insurance, he is able to receive benefits before he passes on. This is in contrast to the situation with a life insurance only policy, for which benefits are not paid to the beneficiary until after the policyholder’s death.

Terminal illness insurance can be purchased from a variety of companies, including, most commonly, those that sell life insurance products. The cost varies based on the coverage, age and health of the policyholder and based on the company issuing and managing the policy.