Most life insurance policyholders do not know they can access an early pay out following a terminal diagnosis.
This is according to a survey from MoneySuperMarket of 2,000 adults which showed just 48% of those polled were aware that some life insurance policies allow you to access a pay-out early if they receive a terminal diagnosis.
The comparison website stressed the importance of customers reviewing their documents to look for terminal illness benefit in their policy schedule as well as speaking to their insurer or adviser rather than waiting until they are under financial strain.
Terminal illness coverage has come under the regulatory spotlight in the last two years.
In October 202, the Financial Conduct Authority (FCA) raised serious concerns about several elements of how insurers were addressing terminal illness benefits attached to life insurance policies.
This included the regulator strongly criticising insurers for the speed of claims where times were typically between two and three months, warning that customers’ remaining time should not be “marred by having to wait or chase for a claims decision”.
Among its findings, the regulator also highlighted that insurers should not assume a 12-month prognosis period for accepting terminal illness claims was appropriate without evidence that it was fit for purpose.
In April 2024, Health & Protection reviewed what action insurers had been taking following on from the FCA’s intervention.
Kara Gammell, life insurance expert at MoneySuperMarket, said: “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,” she added.