Terminal life insurance coverage is one that is growing in popularity as it is one of the few types of insurance that pays out before the policy holder passes away. This article tells about life insurance for terminally ill people, which are considered as terminal illness by insurance provider, the benefits of such coverage and how to find a suitable policy from this condition.
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What are Some Terminal illnesses?
The basic definition of a terminal illness is one that expects to end the life of a person in a relatively short period of time. So, the definition can apply to many different illnesses as one factor is the resistance of the person being afflicted. It is an illness that is considered incurable, but the most common types of terminal illnesses are as follows;
- Advanced Cancer
- Heart Disease
- Muscular Dystrophy
- Cystic Fibrosis
- Parkinson’s Disease
- Dementia and Alzheimer’s Disease
There are other terminal illnesses, but these are considered the most common in the Western world. Insurance companies will calculate the risk of carrying a person with a terminal diseased based on a number of factors that include the survivability rate at the time the disease is diagnosed, potential treatments that are available, and the history of the disease in terms of longevity of the person.
Is Cancer Considered a Terminal Illness?
In and of itself cancer is not considered a terminal illness as it depends on the type of cancer and the stage it is in when first diagnosed. For example, melanoma is skin cancer that has a high mortality rate when it enters the body of the person afflicted. However, as long as it remains on top of the skin it is highly curable and not considered terminal.
For the most part, cancer in the very early stages is considered highly curable when treated with the possible exception of pancreatic cancer or if the cancer is located in an area that is very difficult to treat effectively.
How Does This Policy Work?
Terminal illness coverage allows the benefits that have built up in the life insurance policy to be paid to the policy holder before they succumb to their condition. In most cases, the policy holder must be expected to die from the illness within a 12 month period of time by a physician who is a specialist in this particular type of condition.
Generally speaking, the full amount of the benefits is paid out in one lump sum in order to precede the expected demise of the policy holder. In this manner, any necessary expenses such as funeral costs, providing a legacy for the beneficiaries and other benefits can be paid out before the policy holder passes away. This is one of the lucrative prospect of life insurance for terminally ill.
Terminal life coverage is not to be confused with critical illness insurance which is substantially different since many critical illnesses are not fatal. Each type of insurance is very different and should not be confused when the policy holder chooses the right one for their particular needs.
Typically, terminal life coverage is added as a rider to standard life insurance policies and the cost is generally minimal if the policy holder has yet to be diagnosed with a terminal illness. However, those who are at risk generally pay a somewhat higher rate in terms of their premiums. Those who purchase guaranteed life insurance policies that carry no medical exam or questions will not receive full benefits for the first two to four years in obtaining the coverage.
Life Insurance for Terminally ill Benefits:
Essentially, the only real difference in the benefits from a terminally ill life insurance policy as opposed to standard coverage is that the benefits are paid out before the policy holder passes away. This means that the policy holder may actually enjoy the benefits before they pass away. However, for most people the accelerated benefits are used to pay medical expenses, prepare for funeral costs and the like.
The question of whether this is better coverage than standard insurance comes down to the likelihood of you getting a terminal illness. This is a question that will be based in large part on your family history which indicates to some degree how likely you are to suffer from a terminal illness. However, even family history is not all that accurate an indicator, so you will simply have to compare terminal illness and standard policies.
The cost difference between standard and terminally ill benefit policies is fairly small and some life insurance companies will add it as a free rider meaning that you can take advantage without paying extra. So, if you can get this type of coverage for free or a very small difference amount it can be worth it as you can pay for medical expenses and oversee how the benefits are spent.
Finding Affordable Life Insurance with Terminal Illness:
You can start by looking at life insurance companies that carry terminal illness coverage as a free or very inexpensive rider. Many of these companies will promote this type of rider because in terms of statistics it presents relatively little risk. All that occurs for them is that they have to pay out the policy faster and very few people actually live well past the one year clause.
However, not every provider provides such a policy and some may have it hidden on their websites so you will need to search thoroughly and perhaps ask a question or two to find out if a particular company carries such a policy. Once you have confirmed that the insurance provider does have such a policy, you can then compare their rates to others and choose the one that works best for your needs.
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If you are faced with a company that does carry life insurance for terminally ill person, but the rates are higher than you would like there are ways to try and negotiate for a better premium. You can cite your family history or better yet undergo a medical examination showing that you are free of any terminal disease. This may help convince an insurance company to lower their rates when it comes to your coverage with you saving money in the long term.