Wanna Claim - Die Fast

Terms and conditions of terminal illness payouts on life cover should be reformed to take into account advances in medicine, it is argued.

 

Life insurance policyholders may not be covered under terminal illness cover because they are living too long. The standard terms and conditions for terminal illness benefit on life cover is that if the policyholder is diagnosed with a terminal illness then if their life expectancy is less than 12 months, the policy pays out straightaway.

The idea of terminal illness benefit is that as the policy is going to pay out anyway, then it might as well pay out when the policyholder can benefit from it.

Better life expectancy

However, if life expectancy is 12 months or more then payout s are not made until the policyholder dies. But terminal illness insurance policyholders could be left ineligible for cover because they are not dying quickly enough.

The standard wording of policies says policyholders must be given less than 12 months to live in order to qualify as a terminal illness case.

But advances in medical science mean even those with serious conditions have prolonged life expectancy and increasingly, people are living longer beyond diagnosis, reports Financial Times Adviser.

Die quicker

This means that in theory, someone with a terminal illness who has 18 months left on their life insurance policy could miss a payout if they live beyond the end of the term.

Someone in this position would not be able to renew cover once their life cover expires - and as they won't get a payout under terminal cover, their family will get nothing.

The paper says: "Put bluntly, they would be better off dying sooner." It adds that there could be the situation where dying policyholders refuse treatment so they can get a payout.

Andy Milburn, acting head of marketing at Ageas, told the paper that "this is not what insurance should be for" and added he would like to see the industry have a discussion about changing the wording on terminal illness payments.