Which of the following best describes a terminal illness cover?

A terminal illness cover is designed to offer financial protection by providing a lump sum payment when the policyholder is diagnosed with a terminal illness, which is generally defined as an illness that is expected to lead to death within a specific timeframe, often 12 months. This type of coverage allows individuals to access funds during a particularly stressful and challenging time, enabling them to settle finances, seek treatment options, or fulfill personal wishes.

This starkly contrasts with other types of insurance products; for example, income replacement policies focus on compensating lost wages during temporary incapacitation, which does not relate directly to terminal illnesses. Similarly, coverage that pays for medical expenses related to specific conditions, such as cancer, does not encompass the broader definition of terminal illness and is more limited in scope. Terminal illness cover as described here also differs from a critical illness policy, as it specifically pertains to terminal conditions, rather than a wider array of serious health issues.

Therefore, the defining feature of terminal illness cover is the lump sum payment upon diagnosis, which provides significant financial relief to the insured and their loved ones during a critical phase of life.