What is Early Payout on Terminal Illness and It’s Benefits? – A Complete Guide

What is terminal disease benefit?

Terminal illnesses are the ones which are incurable in nature. So, terminally ill means the person is suffering from an illness or condition which is terminal and cannot be cured.

Unfortunately, such illnesses are increasing these days, especially in urban areas resulting in reduced expectancy of life. Heart and lung diseases, advanced cancer, dementia, Parkinson’s etc., are some diseases included in the terminal diseases list. Hence, it is important to have a terminal illness benefit with your life insurance . This will help you with financial security in case a terminal illness is diagnosed.

Life insurance with terminal illness benefit means that the policy allows the family of the policyholder a sum assured as death benefit along with additional bonus. Further, some insurance companies offer a 25% sum assured to the policyholder if the life expectancy of the insured is stated to be below 12 months because of the diagnosis of the terminal illness. In this case, if an advanced amount is paid as early payout, the death benefit may be lowered accordingly by the insurer.

Early Payout on Terminal Illness Insurance

Payout offered in case of terminal illness is early payout. Here, the insurance company pays terminal illness insurance as an early payout what the company would have generally paid in the event of a policyholder’s death. This is because the terminal disease makes the death of the insured almost certain during the policy term.

However, if the policyholder is diagnosed with a terminal illness in the last 12-18 months of their policy tenure, the insurance company might exclude the option of early payout of sum assured. This is because the death of the insured may take place after the policy has ended. However, the insurer will offer death benefits to the family of the policyholder. However, they cannot claim an early payout.

Who is eligible for terminal illness benefit?

Below are some of the people who are eligible for the benefits of terminal illness in term insurance: 

• People suffering from bypass surgery
• People with organ failure problem
• People who are suffering from cancer
• People with heart ailments
• Those who are suffering for Alzheimer’s
• Brain tumour patients etc.

Why is early payout on terminal insurance cover important for you?

An early claim benefit on terminal illness is important because it gives the policyholder an opportunity to use the claim money for medical treatment as well as to spend on the family members for their regular needs.

Further, the high coverage offered under a term insurance plan with a terminal illness cover is better as compared to the inexpensive premium paid by the policyholder. So, it is beneficial to buy a term plan with terminal illness cover.

Can I Claim for Terminal illness benefit if I buy my policy after the diagnosis of Illness?

A policyholder has to furnish information about his/her health along with medical history at the time of applying for life insurance. Some policyholders might have to go through medical check-up which helps in analysis of the overall wellbeing of the policyholder. Hence, in case an individual is already diagnosed with a terminal illness before getting life insurance cover, the insurer might reject his/her application.

Is terminal Illness same as Critical Illness?

Like terminal illness, critical illness is also serious in nature. However, these illnesses are curable by using advanced medical treatments. Further, unlike terminal illnesses the critical illness may not lead to death of the patient.  Here are some differences between terminal and critical illness:

Feature	Terminal Illness Insurance	Critical Illness Insurance
Sum Insured	The insured can claim 25% sum assured in case the person is diagnosed with terminal illness	The insured can avail a lump sum amount if diagnosed with critical illness
Coverage	This insurance protects the family of the insured by giving them a valuable death benefit after the death of the insured	The insured can claim benefit even without hospitalization
Other benefit	Monetary benefit is offered to the policyholder if the person is diagnosed with terminal illness and the person has a life expectancy of over 12 months	Here, monetary support is offered to the insured only when they suffer from a critical illness