Millions unaware they could claim early on their life insurance

Key takeaways

• Only 48% of policyholders know they can access life insurance early if diagnosed with a terminal illness.

• Terminal illness benefits help cover essential costs when life expectancy is under 12 months, but end the policy after payout.

• Checking your policy for this benefit can provide vital financial support and peace of mind for families.

MoneySuperMarket research shows that millions of policyholders aren’t aware that many life insurance policies include terminal illness benefits.

Only one in two policyholders (48%) are aware that some life insurance policies allow you to access your payout early if you receive a terminal diagnosis, providing vital financial support when it matters most.

Around a third (28%) of UK adults have a life insurance policy¹, and this hidden benefit could make a huge difference for millions of families.

What is a terminal illness benefit?

In terms of life insurance, terminal illness cover should not be confused with critical illness cover, which is a different type of life insurance protection that covers only specific conditions.

In most cases, insurers define “terminal illness” as a diagnosis where life expectancy is less than 12 months.

While definitions vary, this benefit is often included in term life policies and can help cover everyday costs like mortgage payments, childcare, and household bills, easing financial stress and allowing families to focus on what really matters.

Once your insurer pays you a terminal illness benefit, your life insurance policy will then come to an end, and your beneficiaries will not receive an additional payout upon your death.

A recent nationally representative survey of 2,000 policyholders found that only 48% knew they could access their life insurance early if diagnosed with a terminal illness. That means more than half of families could be missing out on support that’s already available to them.

Why this matters for parents

For parents juggling financial responsibilities, this benefit can be a lifeline.

It can help maintain stability for children, cover essential expenses, and even allow families to make meaningful plans without the added worry of money. Two quick steps to check your cover:

• Review your documents: Look for “Terminal Illness Benefit” in your policy schedule.

• Speak to your insurer or adviser: Don’t wait until you’re under financial strain – clarity now means peace of mind later.

Coverage varies by policy type and insurer, so always check your documentation and confirm with your provider.

Terminal illness benefits are commonly included with term life and whole‑of‑life policies, but not universally. Always refer to your documentation and speak to your insurer to confirm your position.

Kara Gammell
Personal Finance & Insurance Expert

With this knowledge you have more power to choose how and when to use your payout

Terminal illness benefits can provide crucial financial support at a time when every moment matters. Yet, our research shows that around half of people don’t fully understand what their life insurance policy includes, which can leave families facing unnecessary stress during an already difficult period.

Accessing life insurance funds early through a terminal illness payout can help cover everyday living costs, make end-of-life arrangements, and ease financial pressure on loved ones. It can also give people the freedom to spend meaningful time with family without the added worry of money.

Taking a few minutes now to check your policy means you’ll know exactly what cover you have, helping you feel more confident about the decisions you make for yourself and those closest to you.

While no one likes to think about the worst happening, planning ahead today could make a big difference tomorrow.

<sup>Sources
MoneySuperMarket commissioned a nationally representative survey of 2,000 adults who currently hold a life insurance policy. All data correct as of October 2025.
1. https://www.fca.org.uk/publication/financial-lives/fls-2024-general-insurance-protection.pdf</sup>