Terminal Illness Benefit
Definition - What does Terminal Illness Benefit mean?
A terminal illness benefit is an extra feature found on some life insurance policies. With this benefit, if the insured is diagnosed with a terminal illness and their life expectancy is less than one year, they can choose to receive the death benefit payment from their life insurance while they’re still alive. This feature differs from most other life insurance policies, where the death benefit can only be paid out once the insured has died.
Note that life insurance companies outside the United States tend to use this term. In the United States, this benefit is described as the accelerated death benefit.
Insuranceopedia explains Terminal Illness Benefit
This benefit is a helpful way for an insured person with a terminal illness to pay for their medical bills and their final expenses while they’re still alive.
Insurance companies often offer the terminal illness benefit without charging extra. Since the insurance company would most likely pay the death benefit within a year anyway, they allow the insured to receive payment early at no additional charge.