Serious Illness Insurance
Often linked with a life Insurance policy, it's also possible to buy a Life & Serious Illness policy on a 'stand alone' basis. It pays out an agreed assured sum, for defined medical conditions at the time of diagnosis (subject to the terms and conditions of the policy) rather than on the death of the insured. Indeed, you can recover fully from your illness and still retain the amount 'paid out' by the policy.
However, where it is a combined 'Life & Serious Illness Policy' and a claim has been made and paid by the Insurance company in respect of a 'serious illness', no further benefit is payable on the death of the insured party. In other words, you can only claim once - either while living on diagnosis of a serious illness. Or on death as a lump sum payment to your descendents.
Main Use / Advantage
Serious illness cover provides an additional level of comfort in that the benefit of the policy is paid during the lifetime of the insured person rather than solely after their death. The funds can be used as the client wishes providing the policy has not been assigned to a lender, in which case only the amount of the policy, in excess of the outstanding borrowings, will be available to the insured person.
The policy is often associated with level term Insurance, and if so it can be mortgage related. However, if you purchase a 'stand alone' serious illness policy, it is not usually associated with mortgage borrowings and you can use the benefit as you see fit.
