Millions of Brits Urged to Review Life Insurance Policies for Hidden Safety Net
Millions of Brits have been strongly advised to check their life insurance policies, as many may be unaware of a critical financial safety net embedded within their coverage. This feature, known as Terminal Illness Benefit, enables policyholders to access early payments if diagnosed with a terminal illness, providing vital support during challenging times.
Understanding Terminal Illness Benefit
According to financial experts at MoneySuperMarket, the definition of a "terminal illness" can vary between policies, but it typically applies when life expectancy is less than 12 months. Once an insurer pays out the Terminal Illness Benefit, the life insurance policy terminates, meaning beneficiaries will not receive an additional payout after the policyholder's death. This makes it essential for individuals to review their policy schedules to confirm if this benefit is included.
Risks with Older Insurance Policies
Many older life insurance policies contain restrictive rules that may prevent early claims if the policy is due to expire within the next 12 to 18 months. Although most insurers discontinued this practice in 2013, experts warn that those holding older contracts could still be affected. Dale North, from insurance broker Pure Protect, highlighted a concerning scenario: "If the policy expires this year and the policyholder doesn't die until next year, then the family doesn't get anything. I hope I die within this period so my family gets the money."
Expert Advice on Policy Review
Holly Tomlinson, from wealth management firm Quilter, added: "Older life insurance policies can contain exclusions that simply wouldn't be acceptable today, particularly around terminal illness cover close to the end of the term." Brits are urged to speak with their insurer or financial adviser if their policy includes Terminal Illness Benefit, to ensure they fully understand the terms and conditions. This proactive step can help families avoid financial hardship and make informed decisions about their insurance coverage.
