Does Life Insurance Pay Out for Terminal Illness?
Yes, a life insurance policy does pay out when the insured has a terminal illness diagnosis, as long as the diagnosis meets the policy definition. For life insurance, a Terminal Illness is defined as a life expectancy of 12-24 months or less.
The terminal illness diagnosis has to come from a licensed physician and the insurer reserves the right to get a second medical opinion.
For many decades now life insurance policies have included a Terminal Illness provision. This is also known as a Living Benefit. The terminal illness provision allows the insured to receive the policy death benefit upon proof of a terminal illness diagnosis.
How Much Does a Life Insurance Policy Pay for a Terminal Illness?
If an insured has a terminal illness diagnosis most life insurance policies will payout the full policy benefit – prior to the insured’s death. This means if the policy benefit is one-million dollars, the insured will receive one-million dollars while they’re alive. This money can be very helpful to pay off medical bills related to the treatment for the illness and to leave the insured’s family with a financial cushion.
How to File a Terminal Illness Claim
Here are the steps to file a terminal illness claim:
- Contact the insurer’s Claims Department.
- Inform the insurer you want to file a claim.
- Complete the claim forms for a terminal illness.
- Submit a medical records release.
- Provide your doctors contact information to the insurer.
What are the Causes of a Terminal Illness?
The number one cause of a terminal illness is Cancer.
For men the most deadly form of cancer is Lung cancer. It’s the most deadly cancer in men, responsible for more deaths than prostate and colorectal cancers combined. It is the leading cause of cancer-related death, accounting for roughly 20% of male cancer deaths, primarily driven by tobacco use and late-stage diagnoses (source: Cleveland Clinic).
Lung cancer is also the deadliest form of cancer for women, causing more deaths annually than breast, ovarian, and uterine cancers combined. While breast cancer is more frequently diagnosed, lung cancer’s high mortality rate—driven by late-stage detection and smoking—makes it the leading cause of cancer death for women (source: Cleveland Clinic).
Other common causes of terminal illness include heart disease, renal failure and neurological diseases.
How Long Does it Take to Get a Terminal Illness Claim Paid?
Terminal illness insurance follows the same regulations as life insurance. According to State Insurance Regulations, an insurer has 30-45 days to pay a terminal illness claim.
Common Reasons a Terminal Illness Claim Would be Denied
A terminal illness claim may be denied under certain circumstances, such as:
- The doctor doesn’t validate the 12-24 month diagnosis.
- The insurer’s doctor disagrees with the life expectancy.
- Malfeasance by the insurer.
- The policy fails the Contestability.
- Medical records are unobtainable.
- Policy lapse prior to diagnosis.
Conclusion:
Every terminal illness claim will be examined thoroughly by the insurance company. Because there are conditions that must be met, approval and payout are not guaranteed. Therefore, retaining your own claim expert from The Center for Life Insurance Disputes is the best way to secure your benefits.
