In short
Terminal illness benefit allows a life insurance policy to pay out early if you are diagnosed as terminally ill within the policy term.
Terminal illness benefit is a feature included on many term life insurance policies. If you are diagnosed with a terminal illness, usually defined as a condition expected to lead to death within a set period such as 12 months, the policy can pay the sum assured early rather than waiting until death.
Receiving the money early can help with treatment, putting affairs in order, or providing for the family while you are still alive. Once the benefit is paid, the life cover usually ends, because the sum assured has already been paid out.
The exact definition and any time limits vary between insurers, and terminal illness benefit is generally not available in the final months of a policy term. It is worth checking how a particular policy defines and applies the benefit.
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