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What is terminal illness cover?

Rachel Ditchburn
Written by  Rachel Ditchburn
Collette Shackleton
Reviewed by  Collette Shackleton
10 min read
Updated: 29 Jan 2025

We can’t plan for a terminal illness, but adding terminal illness cover to your life insurance plan will help should the worst happen. Even if you are no longer here, terminal illness cover is a valuable protection to take care of you and your family.

Key takeaways

  • A terminal illness is an incurable, life-limiting condition expected to result in death, such as advanced cancer, dementia, motor neurone disease (MND), lung disease, neurological diseases (e.g., Parkinson’s), and advanced heart disease

  • Terminal illness cover is part of a life insurance policy that provides a tax-free lump sum upon diagnosis of a terminal illness to help cover medical bills and adapt living arrangements

  • Typically money is payed out if life expectancy is less than 12 months, payouts may be refused if survival is expected to exceed 18 months

  • Diagnoses made within the last 18 months of the policy start date may also be excluded

Being diagnosed with a terminal illnesses can be life-changing and can cause financial difficulties. Especially if you're no longer able to work. Terminal illness cover can help cover costs and ease the burden for you and your loved ones during this challenging time.

hospital staff in a hospital with a patient in the bed

What is terminal illness cover?

Terminal illness cover is a type of life insurance that pays out a tax-free lump sum if you are diagnosed with an incurable, life-limiting illness such as advanced cancer or heart disease.

It can help pay for:

  • Medical treatment

  • Paying off debts

  • Making mortgage or rent payments

  • Adapting your home

  • Paying for carers

To receive an insurance payout, your doctor must confirm that you have a terminal illness and that you have less than 12 months to live.

What qualifies as a terminal illness?

A terminal illness an illness or condition cannot be cured, and has progressed to the final stage and likely to lead to the person’s death.

Examples of terminal illnesses and conditions include:

  • Advanced cancer

  • Dementia, including Alzheimer's disease

  • Motor neurone disease (MND)

  • Lung disease

  • Neurological diseases, like Parkinson's

  • Advanced heart disease

Is terminal illness cover included in my life insurance policy?

Many life insurance providers include terminal illness cover as standard with their policies, providing peace of mind that you and your loved ones will have financial support when it's most needed.

However, eligibility for terminal illness cover can be affected by your health history. You will be eligible for terminal illness cover unless you have a related pre-existing condition that is likely to shorten your life.

It is important when you first apply for life insurance to answer all the questions truthfully about your lifestyle and health. If you’re open and honest, the chances are that any claim you later make will be easily accepted.

How do I get proof for a terminal illness policy payout?

Your doctor must provide written confirmation that you have a terminal illness, which you can pass onto your insurance provider.

It's important to check your policy documents to see if there are any additional requirements for proving a terminal illness, such as needing a second medical opinion from a specialist or specific diagnostic tests.

When does life insurance pay out on terminal illness?

Unlike standard life insurance, which pays out when you die, terminal illness cover will pay your lump sum amount straight after you've been diagnosed with a terminal illness or condition.

Do I get keep my terminal illness payout if I live longer?

Yes, if you receive a payout from a terminal illness in a life insurance policy, you can keep the money even if you live longer than initially expected.

The payout is made upon diagnosis of a terminal illness, not upon death, so you are entitled to use the funds regardless of how long you live after the diagnosis.

How much does terminal illness cover cost?

The cost of terminal illness cover depends on several factors, including:

Younger people tend to pay less for critical illness cover


A clean bill of health can reduce premiums

Smoking and excessive alcohol consumption can increase premiums

Some jobs are considered higher risk and may increase premiums

Whether you choose individual or joint cover will affect the cost

The more cover you want, the more expensive it will be

Terminal illness cost factors

Life insurance policies on MoneySuperMarket start from just £2.92[1]Data based on the minimum price of life insurance sold through MoneySuperMarket for life insurance only in December 2024. Prices vary based on your personal details & circumstances. for basic cover. This is based on single non smoker policyholder aged under 30, with £100,000 of cover over a 10 year term with a decreasing term.

What's the difference between terminal illness and critical illness cover?

There are some key differences between terminal illness and critical illness cover, including:

Critical Illness Cover

Terminal Illness Cover

Purpose

Pays out a lump sum if you are diagnosed with a serious illness listed in the policy

Pays out early if you are diagnosed with a terminal illness and have a life expectancy of 12 months or less

Cover type

Covers specific critical illnesses like cancer, heart attack, stroke, and more

Covers any illness deemed terminal by a medical professional

Payout condition

You must survive a set period after diagnosis (e.g., 14 days)

You must be expected to live less than 12 months

Policy type

Purchased as a standalone policy or as part of life insurance

Typically included as part of a life insurance policy at no extra cost

Premium cost

Higher premiums due to wider coverage

Usually no extra cost, it's part of life insurance

Payout

Pays a lump sum based on the level of cover selected

Pays out the life insurance amount early (full policy value)

Policy end date

The policy remains active as long as premiums are paid or until the term ends

Only applicable if you have an active life insurance policy

Are there any exclusions for terminal illness cover?

Yes, there may be exclusions for terminal illness and your insurer might not payout if:

  • Your diagnosis claim is made within the last 18 months of the policy

  • You're expected to survive for a longer period post diagnosis e.g. over 18 months

  • You didn't inform them you already had an illness

Compare life insurance quotes

Getting life insurance is straightforward with MoneySuperMarket. You can compare life insurance deals and find a policy that matches your needs and budget.

When using MoneySuperMarket, you'll need to provide some personal details and information about your circumstances. This helps to ensure that the offers you receive are tailored to your specific situation, making it easier to find the right life insurance policy for you.

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  1. Data based on the minimum price of life insurance sold through MoneySuperMarket for life insurance only in December 2024. Prices vary based on your personal details & circumstances.