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Terminal illness clause in a life insurance policy.

Many years ago there was a secondary market for life insurance policies.  If you were diagnosed with a terminal illness, or in some instances where people were diagnosed with HIV and their T-Cell count was a certain level, usually very low, there were brokers or investors who would purchase a life insurance policy from the insured.  They would buy the policy for pennies on the pound.  So a £100k policy might be purchased for 50K or 75K, it would vary according to many factors. One being how much longer the insured had to live.

This gave the insured, who was terminally ill, the cash in advance of dying to do what they may wish.  They may want to travel or do whatever in their final days.

Terminal illness coverage or insurance, is added to some life insurance policies so that if the insured is diagnosed with a terminal illness, they can claim on the policy prior to death or dying.  In some instances the insured must be expected to die within 12 months.

Morbid stuff to think about I know, but it is something to be considered when taking out a life insurance policy.


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