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3 little-known additional benefits your protection policies could give you

3 little-known additional benefits your protection policies could give you

Dec 1, 2021

There are lots of compelling reasons why you should put the right life, illness, and income protection in place.

As well as giving you peace of mind that you and your family will receive financial support should the worst happen, it can also help you to maintain your lifestyle – and your loved ones to maintain theirs – if unexpected events occur.

As well as the well-known reasons to take out protection, there are also three little-known but valuable benefits that your policies could give you. Read on to find out what they are.


1.Terminal illness benefit

Many life insurance policies will pay out the full amount of cover early if you’re diagnosed with a terminal illness. This is commonly called “terminal illness benefit”.

A terminal illness is one where a doctor diagnoses that you will not recover, and that you’re likely to pass away within the next 12 months.

So, why would your life insurance pay out early?

The idea of terminal illness is that it makes it easier for you to make plans for your family and loved ones while you’re still around. It also provides funds that you and your family can use in the remaining months of your life.

For example, you might use the benefit to pay your mortgage, bills, and other financial commitments in the last months of your life if you’re unable to work. Of course, any money you spend while your alive will reduce the amount you leave behind when you pass away.

Remember that the terminal illness payout is not in addition to a life insurance payout when you pass away. It simply brings forward the payment that the insurer would have made on your death.

If your life insurance policy does include terminal illness benefit, and you are diagnosed with a terminal illness, you are not obliged to make a claim. If you prefer, you can wait for your policy to pay out as normal after your death.

Terminal illness benefit is different to Critical Illness cover

Remember  that terminal illness cover is not the same as Critical Illness protection. 

Critical Illness cover is designed to pay a tax-free lump sum if you’re diagnosed with a serious illness covered under the policy, such as cancer, a stroke, or a heart attack.

It’s designed to support you financially during a period where your quality of life may be affected, but which doesn’t result in your death.

When you may be able to claim under terminal illness benefit

There is a range of conditions that may result in a payout under terminal illness benefit. These include:

  • Parkinson’s disease
  • Dementia
  • Advanced cancers. 

Each provider has different criteria for payouts and so a claim will depend on the specific life insurer your policy is with. You’ll normally need to provide proof of your diagnosis to your insurer, who will need to be satisfied that your death will occur within a given period (typically 12 months).

If you don’t die within this period, you won’t have to pay back the insurance to the provider. 

If you have arranged your life insurance on a decreasing basis, your terminal illness benefit will normally decrease at the same rate.

It’s worth also noting that, if your life insurance term is likely to end before you’re expected to pass away, then the life insurer might not pay a terminal illness benefit claim.

Finally, if your life insurance policy is arranged on a joint-life basis – perhaps with your spouse or partner – then an insurer will normally only pay terminal illness benefit once. This is normally on the event of the first diagnosis.


2.Waiver of premium benefit

Waiver of premium benefit is a type of cover, sometimes called a “rider”, that you can add to protection products such as life insurance, income protection and Critical Illness cover. It’s essentially an insurance policy for your insurance policy!

It is designed to cover your monthly protection premiums if you can’t work because you’ve been seriously injured, or you are critically ill. 

In a situation where your income is likely to be affected – perhaps because you can’t work for a certain period – waiver of premium keeps your life insurance policy active by continuing to “pay” the premiums.

Bear in mind that it won’t cover you if you’re unable to work due to unemployment or redundancy.

Waiver of premium is a useful benefit that gives you the peace of mind that you’re still covered during a difficult time. Note that adding this will increase your premium slightly, so it does make your protection a little more expensive.

You must choose to take out waiver of premium when you start your policy

Importantly, you can only include waiver of premium benefit when you take out your life insurance, income protection, or Critical Illness cover. You can’t normally add it as an additional benefit later.

How to claim on your waiver of premium benefit

If you are seriously injured or ill, and you have to claim on the benefit, you should apply to your insurance provider. Each insurer will have different terms, so you’ll need to qualify under the criteria outlined in the terms and conditions of your policy.

You’ll normally be covered for serious injury, disability or a critical illness which has occurred during the term of your policy. The insurer will normally require you to prove that you can’t work, through a doctor’s report or your medical records.


3.Children’s Critical Illness cover

Critical Illness cover provides you with a tax-free lump sum if you’re diagnosed with a serious medical condition such as cancer or multiple sclerosis, or if you have a serious heart attack or stroke.

It can give you the peace of mind that you have money available at an emotional time, allowing you to focus on your recovery.

An additional benefit of Critical Illness cover is that, when you take out an adult Critical Illness policy, most insurers will automatically include children’s Critical Illness cover as standard.

This means that if one of your children, adopted children, or stepchildren (or any future children) becomes critically ill with a condition covered under the policy, you can make a claim. Most insurers will pay up to £25,000 as a child critical illness claim, or 50% of your amount of cover.

Your children are normally covered from a month old until their 18th or 21st birthday (depending on the insurer). An insurer will typically pay a claim if your child survives for 14 days after diagnosis of an illness covered by the policy.

You won’t normally pay an additional premium for this benefit – it will generally be an added benefit to an adult policy.


We can help you to find the right protection

Taking out protection gives you the reassurance that you and your loved ones will receive financial support at a difficult time.

Furthermore, these additional benefits provide extra peace of mind that you will receive a capital injection when you need it most.

We work with dozens of the UK’s leading insurers to find the right life insurance, income protection, and Critical Illness cover for you. 

We can scour the market to find the most appropriate cover for your needs at the best price, and our experts can also help you if you have any previous physical or mental health conditions.

Get in touch with our experts or compare life insurance online today.



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